A Heterodox Approach to the Adjustment Problem

• Author: Courtney Blackman
• Pages: 156-176

THE PRACTICE OF ECONOMIC MANAGEMENT

156

In preparing for this lecture, I read through as many of Adlith

Brown’s papers in Social and Economic Studies as I could find. First,

I was struck by her prolificity. Adlith wrote more papers in one

year than some of her contemporaries have written in an entire

career. Secondly, she left no doubt in my mind that she had

mastered the theory and techniques of her profession. But most

of all I have been touched by her concern with policy issues. What

is more, her passion to improve the lot of her community glowed

through her writings, which reminded me of an observation by

the great economist Kenneth Boulding:

In consideration of economic policy ... the ends of society cannot

be left out of the picture, and the abstractions of pure economics

can only carry us a small part of the way.1

These memorial lectures should help ensure that the good

that Adlith has done will live on after her.

In selecting a topic for today’s lecture I asked myself which

issue appeared closest to her heart. I observed that two of her

papers touched on the adjustment problem. Her paper,

‘Economic Policy and the IMF in Jamaica’, is marked by

penetrating insight into practical problems which still confront

us; for example, ‘As capital outflows continue, given the

8

A HETERODOX APPROACH

TO THE ADJUSTMENT PROBLEM

THE ADJUSTMENT PROBLEM

157

unresponsiveness of direct flows to interest rate changes, the usual

priorities of monetary policy become less relevant.’2 The

conclusions of her paper, ‘Issues of Adjustment and Liberalization

in Jamaica: Some Comments,’ were indeed prophetic. She ended

it with these remarks:

These issues raised here suggest that there are inconsistencies in

the stabilization and liberalization programme; that foreign

exchange uncertainty and a slow recovery of capital inflows and,

therefore, of domestic investment, are likely to continue. In effect,

in the absence of a windfall which raises the available flow of foreign

exchange, the basic strains are ever present. These are continuing

high levels of unemployment and slow investment and output

growth.3

These issues of adjustment with which Adlith grappled with

such insight and tenacity, still haunt us, and so I have chosen as

my topic: ‘A Heterodox Approach to the Adjustment Process.’ I

think she would have approved of this selection even though she

would have done far greater justice to it than I ever could.

The perspective of my lecture reflects my experience as a

contributor to economic policy making in Barbados over the past

13 years. Although there have been broad areas of agreement

between the IMF and the Barbadian authorities, our policies

throughout the last 15 years have been based on economic

principles which, from the conventional IMF–World Bank

perspective, must be viewed as distinctly heterodox. The major

source of departure from the IMF–World Bank economic doctrine

over the years has been over the concept of stable equilibrium

and the efficacy of the ‘free market’, both in the adjustment

process and in the promotion of economic development. For

example, upon realigning our currency from the pound sterling

to the US dollar in July 1975, the Barbadian authorities revalued

upwards by ten per cent. We went on to enjoy five of the most

prosperous years in our economic history and have maintained