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International Economics: A Heterodox Approach

Article in Review of Social Economy · April 2014

DOI: 10.1080/00346764.2013.845340

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Valentin Cojanu
Bucharest University of Economic Studies
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International Economics: A
Heterodox Approach
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Valentin Cojanu
a
Bucharest Academy of Economic Studies
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 Review of Social Economy, 2013
http://dx.doi.org/10.1080/00346764.2013.845340

Book Review

International Economics: A Heterodox Approach. By Hendrik Van den Berg,

(2nd ed.) Armonk and London: M.E. Sharpe, 2012, 670 pages, ISBN 978-
0765625441, $89.95 (paper).
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The prospect of adapting international economics for heterodox audiences is

fraught with challenges. Such is the case with all disciplinary tracks, micro- and
macroeconomics among them, as the fields so intimately and directly tied to the
core of mainstream economic thought. To start with, international flows of goods
and factors are theorized on the platform of comparative advantage, which makes
generalized affluence dependent on the unrestricted exploitation of countries’ best
use of resources on a global scale. While social sciences scholars are not
unanimously enthusiastic of the realism of this assumption, mainstream
economists, unrelenting, consider it to be “the deepest and most beautiful result
in all of economics” (Findlay 1987: 514). Then the intended audience is not a
homogeneous lot. This textbook encourages students to escape “the tyranny” of
just one paradigm (i.e., neoclassical economics) and to embrace such diverse
alternatives as “institutionalists, Marxists, Keynesians, behaviourists, libertarians,
Austrians, structuralists, and dependency theorists” (28).
With a stint in the U.S. diplomatic corps, followed by overseas positions with
two American multinationals, and then graduating a Ph.D. programme in
economics, Professor Van den Berg of the University of Nebraska-Lincoln seems
particularly suited to embark on defying tasks. The publisher’s endorsement
highlights “an exceptionally broad background to the study and teaching of
international economics”, an accolade which is duly acknowledged by the wide
span of his interdisciplinary undertakings and rigorous reality check of theory’s
explanatory power. The twenty-first century undergraduate may find the
textbook’s lack of visuals, dreary typesetting and large page format unappealing
(although a web-based student study guide changes this for the better), but should
rest assured that the value of studying it remains unaltered from aesthetic
criticism. The author takes the reader through an intellectual journey which, apart
from well-knit handling of applied economics, commends educated tastes by
 BOOK REVIEW

entreating interpretations of texts from novelists such as Bernard de Mandeville,

Joseph Conrad, Max Frisch, Walt Whitman and F. Scott Fitzgerald, inserting real-
life characters of academia such as J.M. Keynes or Lawrence Summers in actual
decision-making, as well as drawing on a vast canvas of interdisciplinary thinking
from fields like “sociology, political science, ecology, psychology, neuroscience,
and history” (ix). On these premises, the main achievement of this second edition
of International Economics consists in overcoming the two challenges with
original and thought-provoking solutions.
On the account of distinguishing the textbook into a heterodox product, Van
den Berg supplies ingredients that would make for a separate book on their own
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merits alone. In his interpretation, heterodoxy results from the addition of

“broader issues” of human concern to the neoclassical “reductionism” focused on
“producers, consumers, and markets” (37). The book division reflects this
proffered balance by allocating equally ample space both to accomplished areas of
study such as international trade theory, international trade policy and
international investment and finance (in Parts Two, Three and Four, respectively)
and to “multi-paradigmatic” issues such as “the heterodox approach” itself (in Part
One), the history of the international monetary system, immigration and the
ecosystem (in Parts Five, Six and Seven, respectively).
Heterodoxy is a state of knowledge that at once informs and is informed by
the subject matter and the method of (international) economics. The first
condition reflects well on the author’s conviction that living in an integrated
world directs the focus of scientific study towards all spheres of the global
economy, economic, social and natural. It is this complex systems perspective,
he calls holism, which should offer “a conceptual framework for organizing
thought” (23) to undertake analytical reviews of “complex hypotheses” (34)
about the nature of changes in “human welfare”. The themes of interest, a
number of precisely 20 fundamental ideas being shaped by culture, complexity,
feminism, scientific objectivity, environmentalism, inequality and growth, guide
heterodox thinking “albeit in ways that are often difficult to distinguish clearly”
(11). In the particular case of international economics, the key to explain the
gains and costs of exchanges across borders, the author suggests, lies with
“dealing with strangers”, a prosaic-turned-analytical perspective opening up the
narrow view about the welfare of inert individuals towards the vivid aspirations
of communities of people.
At the same time, heterodoxy coexists naturally with the ongoing, dominant
frame of thought; orthodox analysis offers “good insight . . . even if it is not fully
holistic” (201), and, in fact, both “neoclassical and heterodox interpretations . . . -
proved useful” (199). A concise five-page “exercise” (pp. 44 –48) in the sociology
of economics knowledge, in the footsteps of French sociologist Pierre Bourdieu,

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explains why and how this is possible. The why becomes apparent from the
evolutionary nature of economics: dominant ideas achieve legitimacy and
authority according to social (read: prejudice, influence, etc.) and genetic (read:
the intellectual field one happens to belong to) conditioning that makes others less
successful.
These competing worlds of knowledge accommodate themselves in a
mechanism of selection defined on cultural premises. “Subjective dispositions”
are crucial in setting measures of success and rules of “survival” within a particular
field with which people identify themselves. At some time, the dominance of a
particular paradigm empowers economists with credentials, prestige and other
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signs of cultural capital, which make them predisposed to “symbolic violence”. For
example, the “devastation of the rural society” in Mexico, a direct, predictable
result of regional trade agreements, does not appear among the mainstream themes
as it is considered to be “outside the scope of economics” (47) and so less worthy of
study.
Students of this textbook test their ability to prospect reality through these
lenses in answering end-of-chapters questions such as “Evaluate the Universal
Declaration of Human Rights . . . Does trade affect these rights?” (197) or
attempting to “write an alternative history [of the gold standard] that begins with a
narrow electoral victory by William Jennings Bryan in the 1896 U.S. presidential
election” (446) (hint: read and react on the (only) appendix providing the
candidate’s speech of 9 July 1896). With these assignments, the textbook makes
good on the promise that we will arrive at conclusions that differ sharply from
neoclassical international economic models.
The corroborating probe rests with addressing a diverse audience. Theories
from a wide spectrum of social scholarship find their utility as they bridge the
unexplored gaps between the narrow market view and the holistic ecosystem. The
positive correlation between trade liberalization and development certainly needs
corrections when viewed from the prism of evolutionary and behavioural
economics. The Heckscher – Ohlin model does not suffice; options about income
distribution need to be examined more thoroughly, for example, by appealing to
philosophers’ criteria for social justice or psychologists’ experimental results
about people’s desires, hopes and expectations (pp. 176– 178). Dependency
theory and structuralism offer new insights that challenge us to take on
increasingly complex assumptions. Brazil’s historical case of industrialization and
trade integration is dedicated as much space as the mainstream economic analysis
of increasing returns to scale and international trade to make clear that
government power, political privileges, coercive power and military force count
among the determinants of the world patterns of trade with as much force as
comparative costs.

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 BOOK REVIEW

Approaching the monetary economy sheds light on the issues of growth and
macroeconomic equilibria replacing the hitherto emphasis on development and
gains from world integration. The jargon here also changes, and with its
innumerable acronyms describes investment and finance decisions seemingly
detached from “superficially” (380) explanatory technical models. The author
follows closely unconventional theories, such as Keynes’ perspective of
uncertainty and expectations and Minsky’s financial instability hypothesis,
to arrive at credible analytical frameworks of crises and macroeconomic
fluctuations. To round off the whole argument, he embarks on a historical view of
the international financial system accompanied by a set of six criteria—i.e.,
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employment, growth, globalization, policy independence, price stability and

distributive justice—for determining how well monetary orders worked.
Two-thirds of the way through the book, we find the orthodox models of trade
and finance augmented to the point of overcoming the idealistic, overtly
simplistic economics of a world of “7 billion socially isolated but somewhat
fully informed individuals” (580). Yet a sense of theoretical incompleteness, the
author suggests, is inescapable. Imbalances accumulating in the world economy,
elusive knowledge of solutions for the looming crises, and, after all,
uncontrollable environmental degradation ask for in-depth understanding of
dealing with strangers (pp. 6 –8). Immigration and ecological economics bring
this issue to the forefront over a consistent, nearly 100-page final part of the
textbook. Against this background, the economics of human interaction across
borders loses much of its accuracy while gaining much in relevance for practical
action.
This textbook marks a milestone rather than an endpoint along the way of
reforming economics. The contours are firmly carved in what the author calls
international economic integration instead of international economics. The
changed emphasis results from the goal of “cooperating and acting collectively to
deal with difficult systemic issues” (581) replacing “logically consistent models of
individual consumers and producers” (37). Other ambitions are less satisfactorily
exhausted. For example, the premise “the scientific method can be followed using
words as well as mathematics” (39) at times becomes obscured: a “two-country
partial equilibrium investment model” clashes indecisively on the same page with
constraints originating in a “variety of people’s tastes, ages, family
responsibilities, and present and expected wealth and income, and lenders’
willingness to bear risk” (316). Yet, Professor Van den Berg lays in front of us a
daring project, singular in its scale and introspection to this reviewer’s knowledge,
against which any new attempt of rethinking the basics of economics should
necessarily be measured.

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REFERENCE
Findlay, R. (1987) “Comparative Advantage,” in J. Eatwell, M. Milgate and P. Newman
(eds) The New Palgrave: A Dictionary of Economics, Vol. 1, London: Macmillan,
pp. 514– 517.

Valentin Cojanu
Bucharest Academy of Economic Studies
q 2013 Valentin Cojanu
http://dx.doi.org/10.1080/00346764.2013.845340
Downloaded by [Valentin Cojanu] at 07:32 08 October 2013

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