Rethinking Development and Globalization: Insights from Feminist Economics

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1 Final version is published in The Good Society 14(3): 58-62, 2005, available at (copyright 2005 by The Pennsylvania State University. All rights reserved.) Rethinking Development and Globalization: Insights from Feminist Economics Julie A. Nelson Neoliberal economics, free market rhetoric, and the policy prescriptions of the Washington Consensus are currently pressing towards a radical restructuring of the global economy. Many questions have been raised about these policies by people concerned with the some of negative effects on human well-being that have been observed. Decreases in health and employment related to the imposition of Structural Adjustment Programs (SAPs) on poor countries, global instability resulting from precipitous international capital flows, and the possibility of a race to the bottom in national labor and environmental standards have many observers very worried. Feminist economists have noted that the problems caused by cuts in social services often dictated by SAPs have often fallen most heavily on women (Bakker, 1994; Çagatay, Elson and Grown, 1996; Elson, 1991). More work needs to be done on the effects of such policies, in detail and in context, and on the design of specific alternatives. This essay, however, takes on a more abstract, but also in many ways more basic, question. Why is it that such policies continue to hold such sway, on not only a political but also an intellectual level? Why have alternative approaches received so little acceptance? This essay describes how a feminist-theory-informed view of economics can provide intellectual resources for questioning the hegemony of neoliberal visions of development and globalization and for building better alternatives. A Feminist Critique of Economics At the core of neoliberal thinking lies the belief that free trade, privatization, and unfettered capital flows are required in order to unloose competitive market forces. These forces, in turn, are presumed to guarantee a one-way ride towards greater efficiency, prosperity, and economic growth. This belief gets its intellectual justification from the core model of contemporary Neoclassical economics. In the core model, rational, autonomous, self-interested agents maximize utility or profit. Markets are 1

2 assumed to be perfectly competitive, with numerous buyers and sellers. Given these and a number of other assumptions, the First Fundamental Theorem of Welfare Economics shows that a competitive market equilibrium outcome cannot be improved upon. With the perfectly competitive economy set up as an ideal, then, government interference in economies tends to be condemned as leading to inefficiency. Graduate students in economics study the core model in great mathematical detail. Undergraduates are presented with simpler versions. They learn about gains from trade from an uncomplicated parable about how two countries can benefit by each specializing in producing one good, and relying on trade to provide them with a second good. Not all neoclassical economists are rabid neoliberals, and some economic research creates more scope for government action by tweaking the assumptions of the core model. Yet the image of a smoothly functioning perfectly competitive market economy is still the touchstone of scientific economics. The intellectual roots of this image go back to Adam Smith s assertion that the invisible hand of the market system will automatically cause individuals pursuit of self-interest to serve the social good. John Stuart Mill contributed the idea that the science of economics should be modeled on the axiomatic-deductive model of geometry. Mill also proposed that people, in their economic roles, could be thought of as interested only in wealth. David Ricardo came up with the parable about two countries gaining from trade. 1 This Classical economic image became Neo in the late 19 th century as Leon Walras, Vilfredo Pareto, and others realized they could mathematically formalize the image of the self-regulating system. By adapting models from Newtonian physics, calculus could apparently be as easily applied to economic issues as it previously had been applied to the design of machinery. During the 20 th century, the appeal of the smooth mathematical models of optimizing decisions became so great that mainstream economics left behind its classical definition based on wealth and turned into the science of choice. The standard textbook definition of the field today is that economics studies how people make choices, in the face of unlimited wants and scarce resources. Feminist critiques of Neoclassical economics began to gather steam during the late 1980s. 2 Partly, the critiques grew out of dissatisfaction with the mainstream treatment 2

3 of women s issues. Women s traditional work in families, for example, was (and generally still is) not counted as contributing to national economic well-being because it does not pass through markets. The traditional division of labor between husbands and wives had been modeled as a case of optimizing free choice. Analogous to the case of nations who presumably gain from specializing and trading, the free choice to specialize in breadwinner/homemaker roles was presumed to create in-house gains from trade. Women economists interested in studying labor market discrimination often found their interests dismissed, because sex discrimination was not supposed to exist. In perfectly competitive markets, the core model implies, non-discriminating firms will hire the cheaper productive women, have lower costs, and therefore drive any discriminating firm out of business. Women (and a few men) with a modicum of feminist sensibility found these dismissive explanations outrageous. Partly, as well, the feminist critiques in economics rode on the coattails of 1980s feminist research on the history of science (Harding, 1986; Keller, 1985). As put by Sandra Harding, Mind vs. nature and the body, reason vs. emotion and social commitment, subject vs. object and objectivity vs. subjectivity, the abstract and the general vs. the concrete and particular - in each case we are told that the former must dominate the latter lest human life be overwhelmed by irrational and alien forces, forces symbolized in science as the feminine. All these dichotomies play important roles in the intellectual structures of science, and all appear to be associated both historically and in contemporary psyches with distinctively masculine sexual and gender identity projects. (1986, 25) The power of these intellectual prejudices has been all too clear to those of us who studied mainstream economics. The domain of economics has been defined around markets, efficiency, and competition. Families, equity, and cooperation have been shunted to the side. Economists have put high value on mathematical methods that they believe lead to precision and generality, while they look down on other methods which they believe lead only to vagueness and mere concreteness. Economic man has been assumed to be autonomous, self-interested, rational and to be, in essence, a mind that simply prefers to have some goods and services, and prefers some goods and services over others. Aspects 3

4 of humanity concerned with dependency, concern for others, emotions and actual bodily needs for food, shelter, and care are cast into shadow. In each case, the favored side carries a masculine-associated gender connotation, while the marginalized side carries a feminine-associated gender connotation. While mainstream economists have taken this gender-slanted definition of the field as defining scientific rigor, feminist economists have noted that what they really reflect is masculinist bias. If science is, in fact, a process of free, open, and methodical inquiry, then the dogmas created by allegiance to a particular--and highly artificial image of what economics should be like are obstacles, not aids. The answer to this bias is not, however, to simply turn the tables and adopt the feminine-associated aspects instead. Rather, the key is to get past the dualistic and hierarchical habits of thinking that give contrasts such as reason vs. emotion or generality vs. concreteness their power. We are, in fact, rational and emotional beings. As scholars, we should value not only precision and generality in our studies but also characteristics like richness, fullness, concreteness, and applicability values hidden by the merely dualistic contrasts listed above (Nelson, 1996). Application to Neoliberalism How can feminist economics aid in rethinking development and globalization? First and most obviously, many feminists have questioned the growth in Gross Domestic Product definition of development. Feminists raise objections because GDP neglects household production, and because the traditional hyperfocusing of economists on this mathematically-measurable variable has caused a gross neglect of the roles of customs, power differentials, institutions, and innovations in development dynamics. But, perhaps most importantly of all, GDP is a poor indicator of sustainable advancement in human well-being. Many feminist economists have rejected the choice-theory definition of economics in favor of a definition in terms of provisioning, or how societies organize themselves to create the means for human survival and flourishing (Nelson, 1996; Benería, 2003). Amartya Sen s focus on capabilities has been adopted by many as a more satisfactory development goal or at least as a good starting point for discussion 4

5 (Agarwal, Humphries, Robeyns, 2003; Nelson, 2004) Ecological concerns have also played a role in feminist economic thought (Perkins, 1997). Feminist analysis can also be applied to the neoliberal prescriptions of free trade and privatization. The model that shows that free trade is good emphasizes choice, efficiency, and markets, and is created from thought-experiment manipulation of abstract logic. Observation of real-world concrete situations has been conspicuously lacking. The gains from trade parable is about how each country chooses its production and consumption levels, and how free markets lead to efficiency in production and consumption. The parable can be illustrated with graphs and mathematics: the result looks clean and elegant. These are characteristics, as we have discussed, that are highly valued within the profession. What is left out in the parable? Many things are, among which are questions of history, constraints, institutions, distribution, power, fairness, interdependence, needs, vulnerability, and actual observation of real-world results over time. While neoliberals tell less developed countries that they should open their markets in order to advance, for example, the evidence suggests otherwise. Historically, countries that underwent bursts of industrialization including not only the U.S. and U.K, but also post WWII industrializers such as Taiwan and South Korea--generally did so under regimes of high government involvement and tariff protection of infant industries (Amsden, 2001). Among contemporary economies, the relation between openness to trade and speed of growth is far from clear (Rodrik, 1997). Feminist analysis of biases in the creation of economic knowledge can help point out that-- scientific -looking models to the contrary mainstream Neoclassical development and international economics is an Emperor who has no clothes. Many other critics have also pointed this out, but feminist analysis adds another dimension. Feminist economics explains how the allegiance to a particular style of reasoning is deeply rooted, historically and psychologically, in gender-related ideology. In this sense, feminist thought assists in a radical questioning of the model of neoliberal globalization. Application to Anti-Globalization So far, the content of this essay may not be surprising, given that I have been invited to write it for a journal that expresses dissatisfaction with current versions 5

6 of democratic capitalism and aims to help in creating an eventual restructuring of real world political-economic systems (see cover). I believe, however and here I must emphasize that I do not purport to represent all feminist economists, but only a feministinformed view that feminist insights also offer a very significant critique of certain anti-globalization views. By anti-globalization I mean here the idea that the globalizing capitalist economy is an impersonal and (at least very nearly) inexorable machine, totally driven by its own laws and logic, and inherently opposed to good society goals such as equity and ecological sustainability. I can quote a distinguished contributor to this journal, for example, to give the flavor of this view: We all know that capitalism as an economic system has certain basic properties: its profit-maximizing imperatives make it dependent upon continued expansion and continually greater levels of resource use. It, too, generates pressures to externalize costs and to pollute.nor is this because all corporate leaders personally lack concern for the environment; it is because of the logic of the system: Business executives must take care of business--or they will be out of business!... The logic and dynamics of the capitalist system are such that companies must cut costs if they are to withstand competition If a company willingly spends money on a pollution reduction problem--and then raises its prices to cover the cost, it risks finding its market share reduced by a less conscientious rival firm. (Alperovitz, 1995, 3) What can a feminist-informed analysis of dualistic ways of thinking say about this? The intellectual roots of such a view go back to Karl Marx, Max Weber, and Jürgen Habermas. Marx wrote about the presumably inherent dynamics of capitalist accumulation. Weber characterized the economy as an iron cage. Habermas distinguished between a lifeworld of communication, subjectivity, mutuality, and responsibility and a system arena driven by unconscious, objectifying forces. The message from these scholars is clear: a capitalist economy cannot, by its inherent nature be a realm of responsibility and authentic human relations. Any one who tries to resist the inexorable forces of capitalism--such as a business executive who would like to act out of concern for the environment (as discussed in the above quote) will presumably simply be crushed by the steamroller of competitive market pressure. 6

7 But haven t we just heard this story? This is also how the Neoclassicals explain why sex discrimination cannot exist. A company that refuses to hire a productive female will find that a less prejudiced firm will hire her, lower its costs, and gain market share at the first company s expense, they say. Perfect competition means that nothing whether well-intentioned or prejudicial can come between a firm and its profit! The reason the story is repeated by both Neoclassical and the anti tribes is that the two tribes share a common historical root. Habermas, for example, explicitly traces the source of his theory of system back to Adam Smith (1981, 173, 402). Both sides share the belief that the economy is a massive machine, and that it is populated by creatures who are, by the nature of the system, forced to act in autonomous, rational, and self-interested ways. Real human life is dualistically split off from the inhuman, tough world of economics, and assumed to happen in some other more personal, softer, and perhaps therefore more feminine --realm of experience. I think feminists should beg to differ. The experience of being female in a contemporary economy calls into question the abstract image of the economy as a machine. For one thing, economies are highly gendered and discrimination does exist, in violation of the image of inexorable competitive pressures. While competition is fierce in certain parts of the global economy (for example, in the subcontracting of apparel assembly), the idea that competition disciplines corporate behavior has generally been very much overstated. A business that faces enough competitive slack that it can pay its CEO in the multi-millions could clearly afford, instead, to improve working conditions in its Caribbean factories or pre-treat the waste it puts into a river. The economy is looser than the rigid iron cage image implies. There is, therefore, space for actual human ethical decision-making for good or ill. Another point that feminist economists can make is that consideration of traditionally female occupations such as teaching and nursing directly challenge the notion that participants in the money economy are only in it for the money. I believe that this insight can be taken further. If workers such as nurses and teachers look to their jobs for emotional, creative, and interpersonal fulfillment, isn t it also so unlikely that workers and managers in other sorts of jobs might value the social connections and opportunities to make meaningful contributions that their jobs might create? 7

8 If we start thinking this way about business, worker, and managerial behavior, the dualistic wall between the inhuman capitalist economic system and the humane lifeworld starts to break down. Contemporary economies can be recognized as complex human organizations, and places in which norms and ethics matter (Nelson, 2003, 2006). What this means for the critique of neoliberal globalization is that we have to be careful not to throw the baby out with the bath. Ideologies on either side blind us to the real institutions and outcomes that surround us. Neoliberals explain away any observations of human suffering created by their policies by the excuse that these are merely transition costs on the way to a brighter future. Anti-globalization prescriptions tend when they are not exceedingly pessimistic to be similarly utopian. Many anti-globalization theorists can only envision deliverance as arising from concession of corporate control to a purely wise and benevolent (?) state apparatus, or devolution of all economic activity into small worker- and community-owned enterprises. Both sides, because of their common belief in the mechanical economy envisioned by Smith, are blind to the possibility and necessity of deliberative, responsible action within contemporary economies. Anti-globalizers, like neoliberals, could benefit from study of actual economies. Within feminist economics, for example, a number of researchers have looked at the effect of corporate expansion into the global South, especially when the firms primarily employ women. Ideologically speaking, one should either praise this phenomenon as opening up women s choices and opportunities or condemn it as another example of corporate global reach. Non-ideologically speaking, on the other hand, one finds--not surprisingly--that the effects on women s well-being can positive, negative, or even both at the same time (e.g., Kabeer 2004). And, as with much in life, the devil is often in the details. Conclusion Feminist economics suggests that at least some of the power of neoliberal thinking comes from the way its domain, methods and assumptions follow a particularly masculine-biased image of scientific research, which takes Newtonian mechanics as its model. My own interpretation of feminist insights leads me to believe that the weakness 8

9 of many proposed alternatives to neoliberal globalization can be traced to adoption of the same mechanical metaphor for capitalism. The hegemony of neoliberal thinking does need to be challenged on the a priori grounds that it, in fact, lacks any actual intellectual validity. Even more, however, we need hands-on, empirical, and detailed research concerning the effects of various policies and strategies of development and globalization, and creative thinking about how social and environmental responsibility can be fostered within evolving, contemporary economic institutions. Julie A. Nelson, Ph.D., is a Senior Research Associate at the Global Development and Environment Institute at Tufts University. References Agarwal, B., J. Humphries, and I. Robeyns A special issue on Amartya Sen s work and ideas. Feminist Economics 9(2,3). Alperovitz, Gar Sustainability and the System Problem, The Good Society, 5(3). Amsden, Alice The Rise of the Rest : Challenges to the West from Late- Industrializing Economies. New York: Oxford University Press. Bakker, Isabella (ed.) The Strategic Silence: Gender and Economic Policy. London: Zed Books. Benería, Lourdes Gender, Globalization, and Development: Economics as if All People Mattered. NY: Routledge. Çagatay, Nilufer, Diane Elson and Caren Grown Introduction, special issue on Gender, Adjustment and Macroeconomics, World Development, 23 (11), November: Elson, Diane (ed.) Male Bias in the Development Process. Manchester: Manchester University Press. Ferber, Marianne A. and Julie A. Nelson Feminist Economics Today: Beyond Economic Man. University of Chicago Press. Habermas, Jürgen The Theory of Communicative Action: Volume 2, Lifeworld and System: A Critique of Functionalist Reason. Translated by Thomas McCarthy. Boston: Beacon Press. 9

10 Harding, Sandra The Science Question in Feminism. Ithaca: Cornell University Press. Kabeer, Naila Globalization, Labor Standards, and Women s Rights: Dilemmas of Collective (In)action in an Interdependent World. Feminist Economics 10(1): Keller, Evelyn Fox Reflection on Gender and Science. New Haven, Conn: Yale University Press. Meagher, Gabrielle and Julie A. Nelson Survey Article: Feminism in the Dismal Science. Journal of Political Philosophy 12(1): Nelson, Julie A Feminism, Objectivity, and Economics. London: Routledge Separative and Soluble Firms: Androcentric Bias and Business Ethics. In M. A. Ferber and J. A. Nelson, eds., Beyond Economic Man: Feminist Theory and Economics, University of Chicago Press: Freedom, Reason, and More: Feminist Economics and Human Development, Journal of Human Development 5(3): Economics for Humans. Chicago: University of Chicago Press. Forthcoming, August. Perkins, E., ed Women, Ecology and Economics. Special issue of Ecological Economics, 20 (2). Rodrik, Dani Has Globalization Gone Too Far? Institute for International Economics, Washington, DC, Endnotes 1 I am not, of course, attempting a full exposition of the (often richer and more complex) thought of these writers within this short essay. What is important for my purpose here is pointing out what has been carried on from their thought. 2 What I call feminist economics in this short essay cannot come close to describing the breadth and variety of the field. For a more detailed description and history of feminist economics see surveys such as Meagher and Nelson (2004) or Ferber and Nelson (2003), or issues of the journal Feminist Economics. 10