Gunnar Myrdal was an economist and sociologist who, for most of his career, worked toward economic development reform, devising new ways to combat economic inequality and poverty in developing and developed countries, and to address the growing economic chasm between the two. Many of Myrdal’s theories and concepts were well ahead of the conventional ideas of his contemporaries. Here we will explore some of his work and ideas, including his work on values and objectivity, third-world development, his theory of “virtuous and vicious circles” in economic change, the “soft state”, and his study of African-Americans in the US since the Civil War.
One of the cutting-edge schools of economic thought focuses on a phenomenon that neo-classical economics handles poorly: irreversibility’s, increasing returns, and complexity.1 Myrdal was an early contributor to this perspective with his idea of "circular causation and cumulative effects," a refined model for the commonsense concept of the ‘virtuous/vicious circles.’ 2 Myrdal asserted that “the play of forces in the market normally tend to increase, rather than decrease, the inequalities between regions.”3
In contrast, conventional economics of the neo-classical school of today still can be largely described as a world of everything starting from equilibrium, then after going through disequilibrium, returning to equilibrium. For example, inner city neighborhoods decline until land and buildings are so cheap that it gets going again, thereby moving capital from areas that have been rapidly growing but becoming too expensive. Myrdal did not see it this way at all; he believed it was possible for an area to be hit by serious plant closings and economic restructuring, start on a downward spiral and stay an economic mess. The late Bennett Harrison applied this theory to his work on ghetto economic development in the 1960s and 1970s in the US.
Today's complexity economists echo these notions with their ideas of lock-in effects and path dependence (that history matters and economic dynamics are affected by what you were in the past, what you have become, and now where you start from).
Myrdal’s economic model implicitly makes the case that laissez-faire will not do the trick, and that there are important roles for public investment and services and economic planning in aiding poor nations’ economic growth. Economic progress can occur by way of an “upward cumulative process (is) begun through widespread government controls” 4 to fight inequality by broadening the ownership of wealth in the Third World.
Another important concept for Myrdal was the “soft state.” This refers to a national (or regional or local) governance system, plagued by corruption and rent-seeking. He viewed this issue as one of the greatest barriers to economic progress in developing nations and advocated dramatic government reform for struggling countries. He was radical in his approach to economic development, believing that through government controls of public services, regulation and distribution of wealth, workers’ wage subsidies, infant/threatened industry subsidies, government could eventually expand and grow its private sector. 5
Perhaps Myrdal’s most famous and influential work was his book, “An American Dilemma: The Negro Problem and Modern Democracy.” Published in 1944, the book was the result of several years of research conducted on race relations in the United States and what he called the “American Dilemma.” Myrdal’s argument focuses on what he sees as incongruence between America’s high ideals and their poor performance in dealing with the issue of race relations in the two generations since the Civil War. 6 He cites specific government programs in the new deal, namely restrictions on agriculture out put and the minimum wage. His claims played a large role in the Supreme Court’s 1954 Brown v. Board of Education ruling that deemed unconstitutional the practice of ‘separate but equal’ schools and other public facilities.7
Myrdal’s work also challenged the conventions of social science research itself. In his book Objectivity in Social Research, Myrdal is very critical of research practices and ideologies in the social sciences. Written at a time when anthropologists were still researching ‘native’, untouched, indigenous cultures (the categorical ‘other’) in the third world, Objectivity in Social Research questioned the notion of objectivity.8 “As social scientists,” he argued, “we are deceiving ourselves if we naively believe…. that we do not tend to aim opportunistically for conclusions that fit prejudices markedly similar to
those of other people in our society.”9 Myrdal argued that there are certain biases and valuations in all aspects of ‘empirical’ research: assumptions and methodologies, conclusions and analysis of results, even choices for what is researched. An unbiased research does not exist; from beginning to end, all research has built-in hidden valuations that, if left unaddressed, undermine its credibility: “Every study of a social problem, however limited in scope, is and must be determined by valuations. A ‘disinterested’ social science has never existed and, for logical reasons, can never exist.” 10
In addition to his work as a scholar and professor, Gunnar Myrdal served as a Social Democratic Member of Parliament in his native Sweden, was Minister of Trade for three years from 1945-47, and spent 10 years as executive secretary for the UN Economic Commission for Europe.
He was one of two winners of the Nobel Prize in Economics in 1974. Ironically, the other winner was his opposite – Friedrich von Hayek, a brilliant economist and advocate of markets and the limited role of government in the market economy. Today, among most economists, Myrdal’s “star” has fallen some, while Hayek is no longer viewed as a “crank”. In fact, the Austrian School of Economics that Hayek helped to found has never been more popular, especially among American libertarians. Indeed, Myrdal’s thinking on the “soft state” has taken a rightward turn in the work of the Public Choice school of economics, which argues that the benevolent view of government that Myrdal held despite his warnings, was a bit naïve.
Other works still worth reading are his massive, controversial study, Asian Drama, and The Political Element in the Development of Economics, a pioneering study of the hidden value premises found in classical and neo-classical economics.
1 Ernesto Screpanti and Stefano Zamagni, An Outline of the History of Economic Thought: Second Edition. New York: Oxford University Press, 2005. p. 492. For more on complexity economics, see Brian Arthur, Increasing Returns and Path Dependence in the Economy.
2 Ibid.
3 Myrdal, Gunnar. Economic Theory and Underdeveloped Regions. New York: Harper and Row, 1957. p. 26.
4 Oser, Jacob, and Blanchfield, William C. The Evolution of Economic Thought. New York: Harcourt Brace Janovich, 1963. p. 468.
5 Oser and Blanchfield, p. 467-468
6 As defined by Myrdal, “The whites continually live in moral confusion. They proclaim ideals that are bluntly disobeyed in their daily life. This is the dilemma.” (Myrdal, Gunnar. Against the Stream: Critical Essays on Economics. “An American Dilemma—Has it been resolved?” New York: Random House, 1972.) p. 305.
7 The Library of Economics and Liberty. “Biography of Gunnar Myrdal” 15 Feb. 2007. http://www.econlib.org/library/enc/bios/Myrdal.html.8 Myrdal’s criticisms of the social sciences were truly ahead of his time. Debates over the terms of research and neocolonial imperialist tendencies in research would not be fully addressed in the social sciences until a decade later.
9 Myrdal, Gunnar. Objectivity in Social Research. New York: Random House, 1969. p. 43.
10 Ibid., p. 55.