Peter Bauer. From subsistence to exchange and other essays. 

With an introduction by Amartya Sen. Princeton University Press. 2000.

People who really care about the poor of the world, as opposed to assuaging western guilt, must consider the effect of their actions on "Development economics", the process whereby countries transform themselves from primitive subsistence into modern exchange economies. This book is full of wisdom. My personal favourite chapter "Population explosion: disaster or blessing", concerns the effect of population on development, and the appropriate role of government sponsored population-control programmes. Anyone advocating the implementation of these in less developed countries should read this restrained and cautious book by Lord Bauer, Professor Emeritus at the London School of Economics. He effectively demolishes the popular justification for foreign aid for contraception, by nailing three widespread myths. Firstly when population alters, income per head does not adequately measure economic wellbeing, for the simple reason that the birth of wanted children appears to lower this index, while the death of children appears to raise it. Secondly economic progress is not critically dependent on the supply of land or capital per head. It depends on cultural attitudes and political institutions, and is just as likely to be retarded by low population. Finally the people of less developed countries are neither ignorant of the way to control fertility, unable to do so if they wish, nor acting irrationally under the sway of uncontrollable sexual urges. Like the rest of us they generally have children when they want them. A few have more than they wish and many have less. Since even voluntary programmes designed to increase choice, easily become coercive in the highly politicised countries typical of the developing world, we should avoid them.

In other chapters Bauer shows how foreign aid, buttressed by western guilt and elementary economic errors, often harms development. Only trade with the much-maligned western free market reliably provides capital where it will best promote development, the consumer goods that give an incentive to save, and teaches people the habits and customs of investment and trading. Bauer himself showed many years ago in his studies of the rubber market in West Africa, how little of such trading is recorded in official statistics. I particularly liked the chapter "Ecclesiastical economics: envy legitimised" dissecting the economic illiteracy of many Papal pronouncements. Readers unfamiliar with Bauer may imagine from reading the above that this is an extreme libertarian tract. It is not. As the Nobel prize-winner Amartya Sen says in his introduction, Bauer's views are now commonplace among development economists. However, as the recent anti-trade protests in Seattle and Prague have shown they have a long way to go to achieve popular acceptance. Until they do many inhabitants of poor countries will continue to have their prospects blighted by well meaning but misguided attempts by western agencies to help. People in positions of influence would do well to read this small collection of essays.

Jim Thornton