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Why is economic orthodoxy so resistant to change? The art of paradigm maintenance.

September 17, 2014
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Ever wondered why it’s so hard to shift big institutions (and the economics profession in general) on economic policy, even when events so graphically show the need paradigm_shift-1for change? I’ve just come across a fascinating 2006 paper by Robin Broad, ‘Research, knowledge and the art of ‘paradigm maintenance’: the World Bank’s Development Economics Vice Presidency (DEC)’, summary here. Full paper here. It must be about the oldest thing I’ve blogged on, but I’m interested in what, if anything, has changed in the intervening years.

Broad explores the nature of what Robert Wade calls ‘paradigm maintenance’, describing an elaborate system for creating, maintaining and propagating what she calls the ‘neoliberal paradigm’ (this is 2006, after all) within the Bank. None of that system is explicit. Broad interviews a number of Bank insiders as well as ex-Bankers and illustrates her findings by contrasting the fates of two then Bank economists – David Dollar, arch spin doctor for the neolibs, and Branko Milanovic, inequality guru and general stone in the neoclassical shoe.

Broad identifies 6 components of paradigm maintenance:

Hiring: the DEC overwhelmingly hires economists with PhDs from US or UK universities

Promotion: the Bank has a similar system to academic tenure, and for that economists need to get published in the right journals, as well as by the Bank itself

Selective enforcement of rules: dissident research generally undergoes not just stricter external review, with occasional rejection, but an intriguing ‘stonewalling’ exercise that grinds down would-be boat rockers. Here’s how some interviewees described it:

Your research manager says ‘I don’t want to deal with this’…. Either he ‘won’t clear it or he will say that you need to send it to the ‘center’. Or, if it is a newspaper op-ed, he ‘passes it to the External Affairs person in DEC.’

After a long time there is no response. So, you call him

And he says the piece is ‘not helpful to the debate’ or ‘the debate has moved on’.

And you say ’But doesn’t the fact that they want to print it show that there’s someone still interested in the debate?’

And he never says ‘no’ but never clears it

If, as does sometimes happen, the researcher opts to publish without sign off, they expose themselves to censure (unless of course, their unapproved pieces are on message).

Are those prison bars?

Are those prison bars?

Discouraging dissonant discourse: Dissidents are labelled ‘idiosyncratic’, ‘disaffected’ and otherwise deemed a misfit. According to Nicholas Stern, a former economist, ‘there is a strong hierarchy and an atmosphere much more deferential than would be found in universities.’ Criticism of work from outside the Bank, like the comprehensive rubbishing of some of Dollar’s key papers, fails to penetrate the institution

Executive Summaries and Press Releases that don’t reflect the main report: an old favourite – since journos almost never read the whole thing, there is huge room to drag reports back on message by distorting their presentation.

External Projection: The Bank’s External Affairs Department gets behind the good guys, and ignores the trouble makers.

What’s interesting is the treatment of dissidents like Branko. They are sometimes de facto dismissed/managed out (Stiglitz for criticising neoliberalism, Easterly for being rude about aid, while Ravi Kanbur left after unreasonable pressure to tone down his views on globalization), but if they are not too high profile, the Bank parks them on the fringe of the institution, depriving them of platforms and resources. In contrast, on-message economists like David Dollar get the full works, in terms of media promotion, airtime at major events etc etc.

What this produces is a knowledge system that is extraordinarily resilient to any attempt to move it from its current ideological direction. Even if the new(ish) boss has a more pluralist approach to life, the universe and economics, how much power does Jim Kim have to take on and vanquish this kind of entrenched establishment?

And of course, the Bank is immersed in a wider system involving economics faculties, journals and former pupils in positions of power, all of whom see themselves as guardians of the flame of orthodoxy. No wonder everyone from Queen Elizabeth to angry Manchester economics students is asking why inconvenient facts like the global financial crisis have had so little influence on the way the economics establishment thinks and (more importantly) advises others.

And in a spirit of even handedness, I should say that I recognize some of these mechanisms in play in NGO land too!

I sent this post over to Branko, who recently left the Bank, and here’s what he said:

‘I think that all these mechanisms as described by Robin were operational in 2006. I think (but I am not sure) that the situation is a bit better today. The main reason is that the dominant paradigm was seriously affected by the financial crisis, and even more by the persistence of low growth in Europe, as well by the rise of the previously unorthodox topics like inequality. In such conditions, I think, we have more of a “let a hundred flowers bloom” atmosphere than in 2006.

If I am right, the conclusion is that the paradigm shifts when the contrast with the observed reality becomes too big to ignore. And when it happens in the outside world, the Bank just cannot ignore it.  A bit like the Kuhnian story of paradigm change.’

Robin Broad was less positive:

‘I wish I could be as optimistic, but alas, not much seems to have changed, or at least not in any significant way (although it is significant that Branko has left the Bank.) Your readers might also be interested in how the World Bank reacted to my research (from a subsequent piece in Development in Practice):

‘After the original, longer academic article on DEC appeared in a peer-reviewed academic journal, two gentlemen from the Bank contacted the journal’s editors. Although I was not privy to the communication, I gather that the gentlemen found my scholarship to be ‘poor’ and the journal’s review process wanting if such an article could be published. The editors (who had, in fact, overseen a rigorous review process) offered journal space for the two to rebut my article, with the understanding that I would then be given the customary academic opportunity to reply. But such open academic debate appears not to have been to the liking of the complainants – who feared, I infer, that it would give my article further prominence.’

So over to you – has the Bank changed (and you can comment anonymously, if you happen to rely on it for your mortgage)? Has social media led to greater pluralism (hey, I regularly appear on the Bank’s governance blog)? Are other aid/development institutions any better or worse?

7 comments

  1. BU prof Cornel Ban does something similar with the IMF, looking at how and to what extent orthodox policy was revised post-Lehman. I believe that what he found was that while there was a selective shift in policy tools and in some of the language, that the goals of policy remained the same- a more pessimistic view for sure.

  2. A great posting on what I think is a huge problem. However, the Broad paper and the excellent take-down paper by Robert Wade are getting a bit long in the tooth by now, so readers might also check out a much more recent and equally brilliant output that also carefully shows how the Bank deliberately misleads and distorts its research outputs in order to provide as much (false) support as possible for the neoliberal narrative. This is an edited collection by Kate Bayliss, Ben Fine and Elisa Van Waeyenberge entitled ‘The Political Economy of Development: The World Bank, Neoliberalism and Development Research’ (2011, Pluto Press). In case after case, sector after sector, the Bank’s research is shown to be weak and deliberately distorted and its really just advocacy masquerading as ‘research’. Accordingly, a hell of a lot of the Bank’s research is therefore useless; well, useless if you want the truth and reality upon which to formulate better policies, but extremely valuable as ammunition if your real aim in developing countries is to impose a neoliberal policy agenda on behalf of your main western government stakeholders.

    1. Thanks Milford, but given the speed of publishing, presumably the research in a 2011 book won’t be that much more recent than the Robin Broad paper. Can people suggest other more recent work?

  3. Economic orthodoxy may be one of the most damaging, but many other orthodoxies are resistant to change in many organisations, including NGOs.

    Where I work, in a very secular NGO, support of one of the current orthodoxies is more overt. It is written into everyone’s objectives and there are plans to update the recruitment process so that new hires (in all posts) are either already believers or agnostic – in which case they will be educated on their arrival.

    Recently an external academic research group took 4 years and followed best practice to prove the orthodoxy. It was all a bit embarrassing when they got the “wrong answer” and I wonder if their presentation felt a bit like the moment when Galileo made his big announcements? Acceptance of the results just wasn’t an option and the discussion focussed only on how their method was at fault (NB we didn’t find any faults in the method….).

    Having written that, at least this orthodoxy of ours isn’t damaging, whatever it’s accuracy, and I don’t think there is an obvious need for us to change, but if there was we would find it very hard to cope with. And finally – we don’t have the impact of the World Bank.

  4. Well Duncan you met the current chief economist – he seemed open and reasonable. But then, remember, Stiglitz was a World bank chief economist too. Despite being the Vice President of DEC, the chief economist does not seem to control the department, and Robin’s piece points to the problems. I think Branko might be seduced by the illusion of openness that the Bank’s blogging platforms and other innovations have allowed. That probably loosened the reigns on “approval” for publication. But that doesn’t change the institutional support for “on message” material. Case in point is the Doing Business report – the World Bank’s number one more used and most promoted piece of research output.

    Despite a long process of review led by an independent committee which recommended drastic changes to better align the report with development objectives, the institutional inertia within the Bank and amongst major shareholders colluded to ensure that virtually no changes were made. The report, previously at IFC was moved into DEC, so in theory it would be less ideological, but in fact DEC and the chief Economist have proven no more amenable to change than the IFC. So the indicators which make up the report, despite mostly being unproven, will continue to shape development discourse. And the choice of those indicators is highly politicised and reflects a particular view of theoretical economics. When Doing Business 2015 comes out later this year it will still carry with it an outsized advertising/marketing budget, and its analysis will still be pushed heavily by the Bank in country offices. This isn’t much progress. See more on Doing Business here:
    http://www.brettonwoodsproject.org/2014/06/business-usual-bank-rejects-business-reforms/

  5. One element in the “system” of paradigm maintenance that is worth mentioning is that full-time researchers based in DEC have to “sell” 1/3rd of their time to the World Bank’s operational departments. This is driven in part by a desire to ensure that research produced in DEC is relevant to the practical problems faced by the World Bank’s operational staff, and in part by a simple need to ensure that budget requirements are met/that senior management of the World Bank sees DEC as contributing. And of course it is rare that someone in Bank operations is going to want to pay for somebody to produce research which is going to run contrary to whatever the flavor of the month (or year) happens to be. By itself this does not mean that there is anything wrong with DEC-produced research, but over time it may end up funneling more resources to those who are in sync with whatever the prevailing orthodoxy is.

    Still, researchers in DEC do produce research that runs against the grain. Case in point is a recent report on the failure of development agencies in the field of community driven development projects (http://go.worldbank.org/EIZBM7KPS0). This report was not very welcome in parts of the Bank that have spent a lot of money and time on these types of projects, and so the report itself didn’t get a lot of airtime outside of the channels directly open to DEC.

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