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«SHAKING UP INTERNATIONAL DEVELOPMENT Learning to Learn Undoing the Gordian Knot of Development Today Charles Sabel and Sanjay Reddy The authors, ...»

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weaker actors come to the fore in later ones. After each round, the selection criteria, benchmarks, and institutional arrangements are adjusted to reflect improved measures of performance and a richer operational understanding of success. There is thus public learning as well as learning by private agents. Because the implicit theory of economic development—expressed in the operationally applied selection criteria—is revised in light of the means chosen to pursue them—the pooled experience of actual projects—we can call these arrangements “experimentalist.” In actual practice, at least two variants of such a framework are emerging in the world. In the first, the two-tier structure just described operates first at the regional level. Thus within each region or state of a federated polity there is a framework-defining “top” and a project-proposing “bottom.” The performance of the regional-selection

Challenge/September–October 2007 85Sabel and Reddy

mechanisms are then compared in light of the performance of the projects they advance, and this benchmarking and associated dialogue produce in turn a national framework for revising the regional selection criteria. Alternatively, projects and frameworks can be grouped by industry or sector, with higher-level frameworks emerging from comparisons among these.

Key features of both arrangements are the transparency and learning they foster through competitive but informative comparisons. The assumption of dirigisme is turned upside down: there is no hierarchical center with a claim to definitive knowledge. Instead of a hierarchical subordination of top to bottom, there is a reciprocal and continuing redefinition of both. Instead of a center, hierarchical or otherwise, there is a polyarchic, comparative exchange among like “locales.” Similar frameworks could be established to encourage and publicize learning by financial institutions that lend to firms or consumers or both. (They are also being applied to the incremental but cumulatively transformative reorganization of public administration in advanced and developing countries.) In a fractal-like logic, these simple mechanisms have possible parallels at every level of scale. Learning to learn faces parallel challenges and can have parallel forms at the levels of the village and of the global commons. To illustrate, in the next section we explore proposals for cognate reforms of the international financial institutions.

How the International Economic Order Might Learn The dominant orthodoxy has adopted a strenuously restrictive interpretation of good economic sense. Two decades of orthodox economic reforms have led to little successful development, and still less growth in understanding of the conditions that foster innovation and prosperity in individual countries. This last is hardly surprising.

For, as we said at the outset, orthodoxy’s core assumption is the idea of an established menu of alternatives already known to work the world over. Assuming that there is nothing to learn is a good way to ensure that nothing is in fact learned, even amidst the rich lessons 86 Challenge/September–October 2007 Learning to Learn thrown up by actual experience. The existing international financial institutions have been inhospitable to learning to learn in at least two ways. First, they have too often demanded that countries adopt institutional arrangements that are not conducive to learning, causing them to neglect the resulting sources of growth in favor of purported static efficiency. Second, they have themselves failed to be arranged in a manner that fosters progressive learning about how they should better organize their own activities and promote growth and development in countries.

As at the most basic level of economic life, learning to learn requires the development of new relations between actors and new rules to govern their relations, so as to enable them to shift from stereotyped individual role-playing to active joint discovery. Accordingly, both new relations and new rules governing the relations between developing national economies and lenders, such as the World Bank and the IMF, are required. The new relations must overcome the rigidities of traditional forms of conditionality, allowing developing economies to find their own way to virtuous cycles, but not be so lax that policy mistakes in one country or region can endanger the stability of others.

The alternative international economic arrangements must be oriented toward the facilitation of experimentation and mutual learning. In this respect, the role of the international financial institutions is to serve as knowledge centers and intermediaries, and as dialogic partners in the process of learning. In this function they can be most successful if they are pluralized, in number and in form.

International finance must be flexible to facilitate strategic experimentation and learning in national development. But it must also present constraints if it is to offer effective incentives for the efficient use of resources and enforce a necessary minimum of order and stability in the international financial system. The New Bretton Woods must combine the breakup of the existing monopoly of knowledge and funds with the establishment of a rule-based regime within which autonomous and decentralized actors can foster pluralized ends—undertaking tasks of monitoring and disciplining. We believe, informed by reflection on learning to learn at the domestic level and on observation of

Challenge/September–October 2007 87Sabel and Reddy

the recent vicissitudes of the international financial system, that these goals can be reconciled to a greater degree than so far imagined.

Start by analogically scaling the argument for the iterative relaxation of supply and demand constraints from the domestic to the international level. Just as financial institutions, given hard-money central banks, are a crucial part of the macro-environment for domestic firms, so foreign banks and the international financial institutions are crucial to the macro-environment of domestic economies. Just as firms can increase their creditworthiness by learning and financial institutions can learn to recognize such improvements, so domestic economic institutions—and the domestic economy as a whole—can increase their creditworthiness by encouraging the new interplay of production and finance. In their turn, international financial institutions can recognize and credit these increases accordingly. Finally, just as states can use experimentalist frameworks to foster constraintrelaxing learning domestically, so international financial institutions can use experimentalist methods to achieve this result globally.

This suggests a decentering or “polyarchization” and flattening or “de-hierarchization” of the IMF and World Bank along the lines of the learning-to-learn institutions just contemplated. A federation of institutions should replace the current world-spanning, peak organizations. These development banks, adopting diverse development theories, should have responsibility for encouraging and recognizing the capacity of domestic economies learn to learn. Reserve funds would develop, in consultation with their sister development banks, conditionality requirements consistent with respect and encouragement for this kind of capacity building. Project selection criteria and conditionality rules would be compared, and harmonized when deemed appropriate by the constituent actors (banks and funds and their member governments).

At a minimum, this kind of decentering would make transparent, and so publicly informative and in some measure accountable, practices already present to a degree in the international financial institutions. Any functioning real institution incorporates elements of learning to learn as an essential part of its approach to the world.

88 Challenge/September–October 2007 Learning to Learn However, institutions differ in the extent to which they instantiate and foster this capacity. The international financial institutions must deepen and broaden their capacity to learn. At the maximum, this decentering might actually transform the international economic institutions from advocates of ossified doctrines concerning the determinants of growth to partners in a more flexible process of discovery of what those determinants are. In the course of this transition, the international financial institutions must shift from being monopolists to becoming a congeries of federated agencies able to correct what they learn from their own experience with what is learned in others.

What of the hard case of coordination in a ramifying financial crisis, where the failure of financial institutions, perhaps caused or aggravated by the repudiation of sovereign debt, threatens to cascade, imperiling the world economy? Here the federated banks and funds would have to act as one to have any chance of success at all. But the need for occasional concerted action need not create an autonomy-destroying regress, in which the need for unity in some moments legitimates the suffocation of independence at all the others. On the contrary, the goal should be to press the principle of joint or federated decision-making forward to cover the periods of crisis as well as normalcy, with hard decisions being taken after open review and debate by the actors.

(Perhaps the U.S. Federal Reserve—not as it exists but as originally conceived—could be a partial model.) In any case, here, too, the effect of formalizing federated decision making would be to make transparent and accountable a stealthy, often panic-stricken process that mixes collaboration and collusion in ineffective and manifestly illegitimate ways. The long-term goal should be to pool learning about the response to financial crises in a way that improves what the temporary “center” does in response to global threats, and how it decides to do it.

Development and Democracy Why should we learn how to learn? One reason to favor experimentalist arrangements is that they may enable us to better solve the problems that we face. We can have confidence in such an outcome both

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because the practical efficacy of experimental approaches may already be observed in the world around us, and because such arrangements are closer in spirit and form to the inherent requirements of problem solving under conditions of uncertainty.

A deeper reason, though, is that democracy favors and is favored by experimentalism. This is true because experimentalism requires openness, and openness requires democracy. It is also true because to flower, experimentalism requires the breakdown of social boundaries to communication and the presence of a workable procedural equality.

These are also among democracy’s commitments and consequences.

In turn, the democratic ideal is one of individual and collective selfdecision, self-imagination, and self-construction. These values support the experimentalist spirit and challenge its alternatives. The natural language of experimentalism is democracy. Perhaps democracy will now discover that its natural language is experimentalist?

We conclude by tentatively exploring some possible links between the learning-to-learn approach to development and some promising innovations in democratic participation and problem solving.

Learning and Democracy—The Example of Participatory Budgeting Participatory budgeting is a democratic reform that has caught the attention of progressively minded people throughout the world. As practiced famously in Porto Allegre, Brazil, participatory budgeting involves the sustained engagement of large numbers of persons comprising the entire affected citizenry in sustained discussion of how the allocation of public monies among alternatives such as building roads, schools, sewage systems, and other infrastructure projects should be undertaken. On one view, participatory budgeting is a breakthrough in democratic activism with potential application to a broad range of public problems. On another view, it is an important innovation but limited in its significance to enabling local public control of the clientelism that has vitiated much public spending on infrastructure.

Might some of the methods of participatory budgeting be used to 90 Challenge/September–October 2007 Learning to Learn make learning to learn more broadly accessible and accountable than it typically has been? After all, projects to improve error detection and correction in firms or financial institutions, even if they involve the workforce and government or public-private partnerships, are not the stuff of normal democratic politics. Indeed, they are likely to seem more a technocratic innovation than an expansion of democratic capabilities. Is there some way for deliberation about project selection, and the issues of development strategy it raises, to contribute to a broader public discussion and to be animated by it?

Is there some way that participatory budgeting might be generalized (through incipient institutions of learning to learn) so as to extend its reach into broader questions of development? An example of an area of convergent concern is land use and the licensing practices that determine it. Should the vast agglomerations of small firms in many developing countries’ cities—some of the vanguard of the “third generation” of small, autonomous suppliers—be cleared to make way for large national and multinational firms or gentrification? Or should they and their surrounding communities be provided the combination of public infrastructure and business-support services that help make enduring connections to the outside world? Can the elaboration of a process for making such a decision itself be a proving ground for the integration of new forms of democratic participation and learning to learn as a development strategy?

Learning and Democracy—Self-Expression and Coexistence There is a complex and confounded relation between the expression of self and the pursuit of material uplift. Development is not yet extricable from Westernization. It is confounded as a concept and as an ensemble of practices by its relationship to a particular history of doing. The confounding gives rise to an ambivalent response to the program of development. The effort to break free of this confounding leads most often to ineffectual rage or parody. The search for forms of development that are self-expressing and self-actualizing is anxious, active, and unfulfilled.

Challenge/September–October 2007 91Sabel and Reddy

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