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Bulletin of Indonesian Economic Studies
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IN MEMORIAM: PROFESSOR BENJAMIN HIGGINS,
19122001
Jamie Mackie
To cite this article: Jamie Mackie (2001) IN MEMORIAM: PROFESSOR BENJAMIN HIGGINS, 19122001, Bulletin of Indonesian Economic Studies, 37:2, 183-188, DOI: 10.1080/00074910152390874
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Published online: 17 Jun 2010.
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Ben Higginswas the foremostforeign economistworking inoronIndonesia in the1950s and the main architect of thefirstFive-YearPlan(1956–60),which wasthemodeluponwhichallthelater Bappenas development plans have es-sentiallybeenbased.Hebecameoneof theworld’sleadingauthorities on eco-nomicdevelopment moregenerally,his widelyreadtextbook,Economic Develop-ment(1959,1968,Norton),beingoneof theearlyclassicsinthatfield.Bytheend ofhislifehehadworkedinawiderange ofcountriesandtravelledextensivelyin ‘alltheinhabitedcontinents’,ashisson Ean putit inanappropriately spirited eulogyatBen’sfuneralservice.But In-donesia remained an abiding interest and intellect ual challe nge for him throughouthislife.
BorninCanada,hespentalmostthe lastquarterofhislife inAustralia, liv-ingnearCanberraonafarminthe rug-ged fringes of the Australian Alps, beyond Nimmitabel, from which he maintained regular contact with the ANU,andtheIndonesiaProjectin par-ticular.Hehadearlier beenthesecond occupant of the Ritchie Chair in Eco-nomic Research at the University of Melbournein1948–49,wherehemade asubstantial impact.Whiletherehealso met and later married Jean Downing, whosharedhislifeofseeminglyalmost constanttravelandcaredforhim devot-edlyduringhisfinalyearsofill-health.
Indonesia had an importantimpact onhis thinkingabouteconomic devel-opmentduringhisearlyperiodofwork onthatcountrybetween1952and1955, soitisfittingthatwefocusmainlyonit here.Butthebreadthofhisexperiences inotherpartsoftheworld,asdescribed inhislivelyautobiography,TheRoadLess Travelled. A Development Economist’s Quest (1989,NCDS,ANU,Canberra)— fromwhichnearlyallthequotationsin thisnotearetaken—andhisconstant in-terestinexploringnewideasthatwould explain why some countries made progress towards development while others didnot,make it appropriate to start withhis earlierexperiences asan economistandthedoctrinesheimbibed then.Ideaswerealwayshisprimary in-terest,andthediversesourcesofhisown ideaswerefascinating.
He took his first degree at the Uni-versityofOntarioineconomicsand po-liticalsciencein1929–33,thenspenttwo years studying foranMSc (Econ.) un-der Robbins at the London School of Economics(LSE),then‘attheheightof its glory’, with figuressuchasHayek, Hicks, Ro senstein-Rodan, Kaldor, Tawneyandothersforming‘agalaxyof stars’. From therehemoved briefly to theUniversityofSaskatchewan,thento theUniversityofMinnesota,oneofthe majorcentresof‘Institutional Econom-ics’, where he wrote a PhD thesis on taxation aspects of fiscal policy under
IN
MEMORIAM:
PROFESSOR
BENJAMIN
HIGGINS,
1912–2001
JamieMackie*
JamieMackie 184
the supervision of Alvin Hansen, the foremo st o f Am erican converts to Keynesian doctrines and a pioneer of ‘the New Economics’. When Hansen movedtoHarvard, Higginswentwith him for threeyears as hisresearch as-sistant, encountering there such lumi-nariesasJosephSchumpeter, Gottfried vonHaberler,EdwardChamberlinand SeymourHarris. Hansendrewhim to-wardsKeynesianeconomicsandaway fromtheresistancetoKeynesthathehad derived from Robbins at LSE. Buthe laterconcludedthatitwasSchumpeter whowas‘thegreatestfigureinthe eco-nomicsdepartment…[although] com-pletely antipathetic to Keynesand the NewDeal,regardingthemasthe death-knell of capitalism’.Yet no one influ-encedhimasmuchasHansen,hesays, and itwasHansen’s celebrated contri-butiontoKeynesiantheory,the ‘stagna-tionthesis’,andthepuzzleitgenerated for Ben about ‘how … excess-savings countriesandcapital-scarcity countries [can]bothbestagnant’thatinclinedhim towardsfindingoutmoreaboutthe lat-ter, the so-called ‘underdeveloped’ countries.
Duringthewaryears,Benworkedin Washington forsome time,firstin the US Housing Administration (‘a New Dealagency…thatledmetowards de-velopment economics, since it got me intoplanning’),thentheFederalWorks Agency and later the War Production Board,beforebeing appointedin1942 toanendowedBronfmanchairatMcGill UniversityinMontreal,asignalhonour fora young scholar notyetturned 30. Herehewasagainappointedasan ad-viser to several government agencies and,moresignificantly,toapart-timejob withtheILO(InternationalLabour Or-ganization), which had been moved therefromGeneva.Heworkedclosely withthemercurialMichaelKaleckiand produced a book onPublic Investment
andFullEmployment(1946,ILO),which was ‘very Keynesian in tone, but in-volvedanelaboration andrefinementof technicalaspectsofpublicworks plan-ning Ihadworked oninWashington’. He also met theAustralian economist DickDowning,whohadbeenseconded to the ILO andbecame a close friend, laterurgingBentoapplyfortheRitchie Chair at the University of Melbourne, wherehegreatlyenhancedthestrength ofKeynesianideas.
Bythistimehefelttheneedtospend some timeina developing country,to deepenhis understanding of develop-mentprocesses;sohetookupaposting inLibyawiththeUNTechnical Assist-anceAdministration—’andthatishow I became a development economist’. Fortunately,Libyaturnedouttobe‘an excellent theatrefor my initiation into economic development.… Withso lit-tleinthewayofhumanandnatural re-sources, therange of possibilities was narrow. Development was a matter of doingthebestonecouldwithwhatwas there.’Itwasnota badapprenticeship forhisnextposting,toIndonesia, start-ing inJuly 1952. Hehadtwo consecu-tivestintsthere,oneasaUNAdviserto the Indonesian government on mon-etary andfiscal policies fortwoyears, and thesecond asDirector ofan MIT (MassachusettsInstituteofTechnology) project on Indonesiain theCenter for International Studies (CENIS), which enabled him to return to Jakarta in 1954–55.Hethenwentontothe Philip-pinesin1956–57.
Fellow-shipsintheNationalCentrefor Devel-opmentStudies(NCDS)forsomeyears, andthen intheEconomics Divisionof theResearchSchoolofPacificandAsian Studies(RSPAS).Hecontinuedtotravel andconsultfrequentlyonadvisory mis-sionsuntilhewaswellintohiseighties. Butletusfirstfocusmorecloselyonhis yearsinIndonesia.
Indonesia
HigginsarrivedinJakartainJuly1952, justastheWilopogovernmentcameto power,oneofthemostcompetent Indo-nesiahaseverhad.Hewasgivenan of-fice in the Ministry of Finance next to that of the new minister, Professor Sumitro,1 who wrought aminor
mira-cleinachieving economicstabilisation afterthe Koreaboom and subsequent bust,andwithwhomhebuiltupaclose working (and social) relationship. He alsospentadayeachweekinBank In-donesia with the governor, Sjafruddin Prawiranegara, forwhomhedeveloped considerable respect, despite the disa-greementsthelatter hadwith manyof Sumitro’spolicies.Hespentan increas-ingamountofhistimebuildingupthe newly established Biro Perantjang Negara(StatePlanningBureau),under Ir Djuanda,laterto becomeSukarno’s ‘FirstMinister ’between1957and1963, and his deputy,Ali Boediardjo, both veryableandrespectedofficials.Halfa dozenhighlypaidUNexpertsinfields such as agriculture, mining, industry, populationandnationalincome statis-ticsand labourpolicies wererecruited in1953.
TheFirstFive-YearPlanwasslowly puttogetherover thenexttwo years, and submitted to the government at the end o f 1955 (altho ugh no t ap-proved by parliament until 1958, by whichtimeitsbasicassumptionshad been underminedby the regional re-bellionsof1957–58,thenationalisation
of allDutch assetsin thecountry be-cause of the West Irian dispute, the collapse of export earnings and the mounting inflation). Ben later com-mentedthat:
In retrospect, the Indonesian plan for
1956–60 wasprobablynoworseand no
betterthanmostplansoftheperiod.Itwas
notreallya development plan atall.At
bestitwasadevelopment budget:there
was nostrategy, virtuallyno structural
change,certainlyno‘bigpush’.
The Plan went through the usual macroeconomic exercisesofthetime,he remarked,butonaverymodestscale— i.e.estimatingnetcapitalformation(at 5–6%, andhopingitwouldriseto8%), guessing at an ICO R (incremental capital–output ratio) of just below 2:1 and assessing national incomegrowth at3%,whichwouldyieldariseof0.78% p.a.inlivingstandardsovertheplan pe-riod.(‘A0.78percentimprovement on apercapitaincomeofUS$98washardly calculated to bring joy to people’s hearts.’)Projectexpendituresinthe vari-ousfieldswereworkedoutonthebasis of theirdevelopment potential,within the constraints offoreseeable funding. Altogether,‘itwasarather dishearten-ingeffort,butitreflectedourmost opti-misticestimatesofdomesticandforeign resourcesthatseemedlikelytobe avail-able’.
dis-JamieMackie 186
astrously quasi-socialist ‘Guided De-mocracy’regimein1959.However,the PlanningBureauandthemethodology onwhichitsPlan hadbeenbased con-tinuedtoexertaninfluenceintwoways. First,manyofthebunchofbrightyoung UniversityofIndonesiaFacultyof Eco-nomics graduates who had nearly all been students of Sumitro—and indi-rectlyBen—continuedtoworkthere (al-though not the two stars who later becametheforemostofthe‘technocrats’, Widjojo Nitisastro and Mohammad Sadli,who took overSumitro’srole at theEconomicsFaculty).This group in-fluenced the transmogrified variants thatsucceededthefirstPlan,producing M ohammad Yamin’s fantasy of an Eight-YearOverallDevelopment Planin 1960, and later the far more effective Bappenas pla ns drawn up under Widjojo’sleadershipbetween1969and the1980s.Second,the basic methodol-ogylaiddownbySumitro,Djuandaand Higginscontinuedtobefollowedinall ofthesucceedingplans.
After joining MIT in 1954, Ben re-turnedtoIndonesiaformuchof1954– 55 and worked closely with various membersofagroupofMITscholars,but alsofoundhimself‘asmuchanadviser tothe Indonesiangovernmentasever, dealingwithsubstantially thesameset ofproblemsasbefore’.Heevenplayed a part in negotiating, on behalf of the government, the first set of post-inde-pendenceoilagreementswiththethree ‘oilmajors’,Shell, Stanvac andCaltex, in1955.Asaresultofthatexperiencehe waslatercommissioned bytheNational PlanningAssociation inWashingtonto writethebriefstudyStanvacin Indone-sia,alittleknown butuseful contribu-tion to the sparse literature on theoil industrythere.
AtMIThebroughttogetheran im-pressive group of very able Ameri-cans,includingBillHollinger,Douglas
Paauw, Jeanne M intz, Gu y Pauker, RuthMcVeyandseveralofthefamous ‘Modjokutoteam’ofanthropologists, Clifford and Hildred Geertz, Robert Jay, Alice Dewey, Ed Ryan and John Fagg,thepioneersinpostwar anthro-p o l o g i c a l r es ea rc h in I n d o n e si a. GeertzlaterwrotewarmlyaboutBen’s encouragement to him in the work that was later published as Agricul-tural Involution—a seminal although partially misleading work—saying thatoftheeconomistshehad encoun-teredBenwas‘oneofthebest…who tried to deal with the situation, to learn about the society and culture, not toassume it wasthe same asthe USA or Canada, but also not to give up on economics’ (Geertz, ‘Recollec-tions ofan Itinerant Career ’,BIES 24 (3), December 1988: 36–7). Ben later wrote that ‘recruiting those bright young anthropologists was the best thingthe[MIT]IndonesiaProjectdid’. He feltalsothatthe interdisciplinary approaches to Indonesia’s develop-ment and the newtheories being ex-ploredatCENISwerecreating‘asense ofexplorationandintellectual excite-ment—in retrospect, perhaps more thantheythemselveswarranted’.
(Jean also co-authored several other bookswithhim).
BenlaterobservedofhisIndonesian experiences that
it is difficult now, more than thirty
yearsafterwards,torecalltheextentof
ourignoranceofthedevelopment
proc-essatthattime.Theneoclassicaltheory
onwhichmostofushadbeenbrought
upincludednotheoryofeconomic
de-velopment.Ithadonlyatheoryof
capi-tal accumulation, with technological
progresstakenforgranted.Schumpeter
hadtaughtustheimportanceof
entre-preneurship,buthadnot toldushow
tocreateentrepreneurswheretheydid
notexist…Fewofushadyetlearned
howtoapplyMarxistanalysisofpower
structurestoimproveour
understand-ingofparticularsocieties.
Oneconclusionhelaterdrewwas:
ThemostimportantthingItakefrommy
Indonesiaexperienceisthis:fora
coun-trytodevelop,itmusthaveawidely
ac-ceptedideology … whichwill dotwo
thingsat once:unifythe peoplebehind
theirgovernments, andprovidea
frame-workwithinwhichdecisions,bothprivate
andpublic,canbemade,whichare
con-duciveto development… Butsuch an
ideologyiswhatIndonesiahasneverhad,
andisstillgropingfor.
Inwritingthe‘SurveyofRecent Devel-opments’fortheBIESinMarch1972,Ben returnedtothisproblemwhich,hesaid ‘hasplaguedIndonesiaeversince inde-pendence—how to find an ideology whichisatonceconsistentwiththe com-plexsocio-culturalheritageand compat-ible with economic development’—a problemwhich‘remainsunsolved’(BIES
8(1),March1972:28–9).Hedidnotthink Soeharto’s pragmatism or ‘adhocery’ wouldbeanadequatesubstituteforsuch anideology,andsuggestedthat,whilethe NewOrderpoliticalstructurehadsofar worked best for Indonesiain termsof development, that‘maybe a historical accident…Steadygrowthmightnot
sur-vive achangeinthisleadership.’Thirty yearslateronecanonlysayhewas prob-ablyright.
DevelopmentEconomics:
HisLaterThinking
Over the next 20 years, Ben Higgins went ontobecomeone oftheworld’s acknowledged authoritiesonthetheory andpracticeofeconomicdevelopment, called uponto give advice tonearly a dozencountries.InaUNExpertGroup on SocialPolicy and Development in 1969hewasmadeco-chairman withthe eminentGunnarMyrdalatalandmark meetingthatgaverisetotheconceptof a ‘UnifiedApproach to Development PolicyandPlanning’.Butwithhis con-stantlyenquiring,scepticalmind,hewas neverrigidlycommittedtoanyone doc-trineonthesubject,andwasresponsive to thearguments even of the depend-ency school critics of conventional approachestodevelopment, while disa-greeing with many oftheir views. (In facthebecameagoodfriendofAndre GunderFrank,despitetheirdifferences.) Heremarkedlaterthatbytheendofthe 1960s,muchof
the excitementand enthusiasm of the
1950s[hadbeen]groundintodustbythe
millstones ofdisappointingexperience
andtherevelationofflawsineverynew
theoryoffered—balancedgrowth,
unbal-ancedgrowth,stagesofgrowth,growth
poles,backwashandspreadeffects,
envi-ronmental determinism,cultural
deter-m inis deter-m, technological and region al
dualism. Itwasnotsomuchthat these
theorieswere wrong as thatthey were
incomplete.
This realisation led him towardsa startlingidea:‘Wedidnotneedanew gen-eral theory’ (hisitalics).We could deal withtheproblemsofeachsocietyinan
adhoc,pragmaticway.
JamieMackie 188
various countrieshe visited interms of three main themes—regionalism a n d m i sd ev e l o p m e n t; h u m a n re -sources anddistributionaspects;and the 1980s synthesisinto a‘new’ new approach. Hisimmersion in regional planning issues had the most pro-foundinfluenceonhisideasaboutthe scope andmethodofpolicy formula-tionandplanning,completing
thelongprocessbywhichIhavebecome
disenchanted with the two dominant
paradigmsinthe developmental
litera-ture, neoclassicaland neo-Marxist … I
havemovedalongwaytowardsthe
In-stitutionalistSchool,whichItreatedinmy
Ritchie Professor InauguralLecture of
1948asvirtuallyalunaticfringe.
Bytheendofhisjourneyhehadbecome
increasingly convincedoftheneedfora
marketeconomytobemanaged,andfor
centrally planned economies to make
more useof themarket …Ibecame
in-creasinglydiscontented withany‘leave
ittothemarket’or‘leaveittothe
plan-ners’approach.Eachcaseisinsome
de-greeunique…Wherethemarketworks
wellthereisnopointininterfering with
orsupplementing it.
Herejectedtheexclusively‘leaveitto the market’ approach atthree levels. First,empirically,‘marketfailure’is sig-nificant, because of ‘imperfect knowl-edge,imperfectdiffusionofinformation, imperfectforesight,andrisk aversion’. Second,‘themethodologicaland philo-sophicalunderpinningsofneoclassical welfareeconomicsarefaulty’.Finally,
I d o not be lieve tha t a free m arke t
wouldalwaysfunctionsmoothly,inthe
interestsofsociety,aloneandunaided,
eve n if th e tec hnical im per fections
could beovercome.Economic growth
cannotbeassumedtobe‘anaturalstate
ofaffairs’nomatterhow‘free’the
mar-ket. The marketproduces growth
un-d e r f a v o u r a b le c ir c u m s ta n c e s ,
including good management. Under
unfavourablecircumstances,including
badmanagement,itcanproduce
stag-nationorevendecline.
Inhisbasictheoreticalassumptions he had moved towards a preference for classical as against neoclassical economics.
Intermsofscope,methods,
philosophi-cal underpinningsandrelevance,
eco-nomics wentoffonaside-trackinthe
1870s,and itishightimewegotback
on again…Economicsisnotthehard
scienceIclaimedittobeinmy
Inaugu-ralLecturefortheRitchieChair.Itcan
never bethekind ofhardsciencethat
physics is … [But] it might becomea
hard science like biology, if we have
sense enough to follow that route, as
theClassicaleconomistsessentiallydid
…Itisunfortunatethatwedidnot
con-tin ue to m a ke p rog re ss w ith in th e
frameworkoftheClassicalschool,and
that weignored thepleas ofMarshall
andtheInstitutionalistsforamore
bio-logical, organic, more evolutionary,
moreclinicalapproach.Butatleastwe
can start now, and our experience in
tackling thedevelopmentproblemsin
countriesat alllevelsofpercapita
in-comeprovidesarichbankofdataand
information on whichto draw.I have
littledoubtthatfuturehistoriansof
eco-nomicthoughtwillconcludethat,inthe
secondhalfofthetwentiethcentury,the
development economists were on the
true‘mainline’allthetime.
Attheendofhiscareerasatthe be-ginning,Ben’sdeterminationto com-b i n e b as ic e c o n o m i c th e o r y an d analysiswithsolidempirical enquiry and applications of theory was his hallmark.
Notes
* With assistance from H.W.Arndtand
othercolleagues.
1 SeeobituaryforProfessorSumitrointhis
