IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/2553.html

Ricardo Was Right: Unless one Can Enforce "Productive" Behaviour from Rentiers, Sustainable Growth is not an Option -While Emerging Asia Succeeded, the West and Latin America Failed, Caught in their "Neo-liberal Trap". A Tribute to Geoff Harcourt

Author

Listed:
  • Palma, J. G

Abstract

The 1980s neo-liberal reforms led the West -both developed and Latin America- to capitulate to rentiers at the worst possible time given rapid technological change and evolving world order. Instead of productive flexibilities, they delivered the rigidities of a 'neo-liberal trap', with its growth-retarding trilogy: a 'market inequality-augmenting, investment-weakening, and productivity growth-retarding' scenario. These reforms turned loose the 'uncreative-destructiveness' of a rentier-based accumulation by indiscriminately strengthening rentiers' property-rights, which allowed them to build an economy and a political settlement -even an ideology- in their own image. In such distorted markets, technological change and international trade could only create market opportunities, but not the necessary 'compulsions' so that they are taken up. Following Geoff Harcourt's lead, I analyse this self-destructive rentier-drive returning to 'classical economics'; in my case, to a broad Ricardian perspective on rents and rentiers. Emerging Asia, meanwhile, was able to take these opportunities by being able to redirect rentiers' income towards socially desirable investment strategies -aimed at 'demand adapt' and 'supply upgrade' their productive strategies. Bretton Woods was a guide. But in the West, as rentiers gained the upper hand, the resulting process of 'rentierisation' -of which financialisation is just one, although leading, aspect- is now proving as toxic for inequality, investment and productivity-growth as it is for our democracy.

Suggested Citation

  • Palma, J. G, 2025. "Ricardo Was Right: Unless one Can Enforce "Productive" Behaviour from Rentiers, Sustainable Growth is not an Option -While Emerging Asia Succeeded, the West and Latin America Failed, Caught ," Cambridge Working Papers in Economics 2553, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2553
    as

    Download full text from publisher

    File URL: https://www.econ.cam.ac.uk/sites/default/files/publication-cwpe-pdfs/cwpe2553.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 1-33, March.
    2. A. P. Thirlwall, 2015. "Essays on Keynesian and Kaldorian Economics," Palgrave Studies in the History of Economic Thought, Palgrave Macmillan, number 978-1-137-40948-5, March.
    3. Richard Lipsey, 2007. "Reflections on the general theory of second best at its golden jubilee," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(4), pages 349-364, August.
    4. G. C. Harcourt, 2001. "Selected Essays on Economic Policy," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-51056-2, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wilson Quijano & Diego Alejandro Guevara-Casta�eda, 2021. "Desindustrialización: evidencias desde una mirada kaldoriana para Colombia (2005-2017)," Ensayos de Economía 19342, Universidad Nacional de Colombia Sede Medellín.
    2. Palma, J. G., 2019. "The Chilean economy since the return to democracy in 1990. On how to get an emerging economy growing, and then sink slowly into the quicksand of a “middle-income trap”," Cambridge Working Papers in Economics 1991, Faculty of Economics, University of Cambridge.
    3. Özgür Orhangazi & A. Erinç Yeldan, 2021. "The Re‐making of the Turkish Crisis," Development and Change, International Institute of Social Studies, vol. 52(3), pages 460-503, May.
    4. Izaskun Zuazu, 2023. "Structural Change and Gender Sectoral Segregation in Sub-Saharan Africa," Economics Working Paper Archive wp_1027, Levy Economics Institute.
    5. Luis Bauluz & Yajna Govind & Filip Novokmet, 2020. "Global Land Inequality," PSE Working Papers halshs-03022318, HAL.
    6. Simon Alder & Timo Boppart & Andreas Müller, 2022. "A Theory of Structural Change That Can Fit the Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(2), pages 160-206, April.
    7. Simplice A. Asongu & Vanessa S. Tchamyou & Ndemaze Asongu & Nina Tchamyou, 2018. "The Comparative African Economics of Governance in Fighting Terrorism," AFEA Working Papers 18/046, African Finance and Economic Association (AFEA).
    8. Eduardo Lima Campos & Rubens Penha Cysne & Carlos de Castro, 2025. "Multi-kink quantile regression based analysis for industrial structure of non-high-income economies," Economics Bulletin, AccessEcon, vol. 45(3), pages 1523-1531.
    9. Lütkenhorst, Wilfried, 2018. "Creating wealth without labour? Emerging contours of a new techno-economic landscape," IDOS Discussion Papers 11/2018, German Institute of Development and Sustainability (IDOS).
    10. Baldwin, Richard & Venables, Anthony J., 2015. "Trade policy and industrialisation when backward and forward linkages matter," Research in Economics, Elsevier, vol. 69(2), pages 123-131.
    11. C. Seri & A. de Juan Fernandez, 2021. "The relationship between economic growth and environment. Testing the EKC hypothesis for Latin American countries," Papers 2105.11405, arXiv.org.
    12. Pierre-André Buigues & Elie Cohen, 2020. "The Failure of French Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 249-277, June.
    13. Güneş Aşık & Ulaş Karakoç & Şevket Pamuk, 2023. "Regional inequalities and the West–East divide in Turkey since 1913," Economic History Review, Economic History Society, vol. 76(4), pages 1305-1332, November.
    14. Stefan Pahl & Marcel P. Timmer, 2020. "Do Global Value Chains Enhance Economic Upgrading? A Long View," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1683-1705, July.
    15. Sally Murray, 2017. "New technologies create opportunities," WIDER Working Paper Series wp-2017-156, World Institute for Development Economic Research (UNU-WIDER).
    16. Simplice A Asongu & Sara Le Roux, 2019. "Understanding Sub-Saharan Africa’s Extreme Poverty Tragedy," International Journal of Public Administration, Taylor & Francis Journals, vol. 42(6), pages 457-467, April.
    17. Mishra, Soumya, 2025. "Migrant capital: The role of internal migrants in mediating agrarian-industrial transformation in Northern India," World Development, Elsevier, vol. 192(C).
    18. Ahmet Sekerkaya & Feyza Nur Ozkan & Gozde Gusan Kose & Dogan Akarsu, 2020. "Consumer Reactions to Technological Attributes in Product Design: A Technology Acceptance Model Perspective," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 34(2), pages 151-176.
    19. Tulla Antoni F., 2019. "Sustainable Rural Development Requires Value-Added Activities Linked with Comparative Advantage: The Case of the Catalan Pyrenees," European Countryside, Sciendo, vol. 11(2), pages 229-256, June.
    20. Thomas Daum & Ygué Patrice Adegbola & Geoffrey Kamau & Alpha Oumar Kergna & Christogonus Daudu & Wahab Akeem Adebowale & Carine Adegbola & Charles Bett & Wellington Mulinge & Roch Cedrique Zossou & Ab, 2024. "Made in Africa – How to make local agricultural machinery manufacturing thrive," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1079-1109, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cam:camdae:2553. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.