TINBERGEN, IDEALIST AND INSPIRER BY JAN PRONK (ARTICLE)
Tinbergen as an idealist and inspirer. That he was, in addition to being a scientist of world stature. It is generally acknowledged that his work from the 30s to the 80s of the previous century was of inestimable value. Is it still significant, now that the outlines of entirely new relationships are emerging at the beginning of a new millennium? Can his ideals also be a source of inspiration today? To what extent is his approach to problems still relevant now? Are the solutions that he proffered, which date from the years of the depression, post-war reconstruction, North-South and East-West oppositions in the world, also applicable under conditions of globalisation and contradictions determined not only by economic factors?
This article was written by Jan Pronk in 2003, commemorating the one hundredth anniversary of Tinbergen’s birth.
At this meeting on the occasion of the commemoration of Jan Tinbergen’s 100th birthday I do not wish to attempt to answer those questions by sketching the development of Tinbergen’s scientific work or by an extensive discussion of the extent to which that work today forms part of the state of the art of economics. I would like to refer to others for such overviews, for instance to the excellent overview published by Jacob Kol and Pieter de Wolff 1) and articles by Henk Bos 2), Bent Hansen 3), Hans Singer 4) and Lawrence Klein 5). Many of his fellow scientists and students have commended his work and acknowledged their debt to him. Tinbergen brought about breakthroughs in economics from which many have benefited. For this reason, he was rightly awarded the first Nobel Prize for Economics together with Ragnar Frisch in 1969.
Above all, I would like to discuss the social significance of Tinbergen’s work. Of course, that is not separate from its academic significance, but it is possible to be an academic without one’s work having major social significance. The reverse is also true: one may have considerable social significance without any concern for rational and scientific analyses of the social process. Rational insight into the way society works is neither a necessity, nor a sufficient condition for the successful influencing of social processes. Power or intuition may be sufficient. However, not everyone has these capacities and those who do have them are tempted to use these mainsprings to their own advantage. Rationality, on the other hand, is not by definition complacent. Rational insight leads to the appreciation of concepts such as ‘the public interest’ and ‘enlightened self-interest’, certainly if one is willing to make the underlying values and norms explicit.
The point I wish to make is that the present social relevance of Tinbergen’s work is the result of this combination: a rational method of scientific practice aimed at addressing major social issues, in such a way that both the underdog and the community as a whole are served by doing so.
Tinbergen enjoyed a long life and a long working life. The nature of the social issues changed. Over time those who were the underdog kept changing. The importance of the community, as well as the definition of what we understand by the community, also changed. At the end of the 20th century the world looked very different to how it looked at the start.
Experienced? Yes. Tinbergen lived in the knowledge that the achievements of the 19th century had to be put to use in the struggle against its evils. He followed the fundamental developments during the 20th century closely and tried to influence these by refining the achievements of the past and seizing upon new achievements to manage continuing and new evils. He also looked ahead, foresaw, extrapolated from trends, gave warnings and made recommendations on how to solve the major problems of the 21st century, which emerged soon after it commenced.
Entirely new relationships emerged in the 20th century. America outclassed Europe in all respects: economically, technologically and militarily, and therefore also politically. Initially both areas were ravaged by a depression and an economic crisis, and by major economic fluctuations. Europe itself was first torn by (world) wars and afterwards began a laborious integration process, with the creation of a Community as its rational political aim, in which the nations would be so dependent on each other for their economic progress that a repetition of the European wars would not be deemed to be in anyone’s interests. At the same time, West Europe and the United States, which were both characterised by political democracy and an economic system in which capitalism was linked to various gradations of social security and public responsibility, conducted a Cold War with the East, led by the Russian Soviet Union, which had opted for a totalitarian communist economic and political system. The Cold War was based on mutual deterrence, both militarily, and politically and ideologically. Which was the better system? That was also a question which many of the new countries of the South asked themselves, most of which were former colonies that had achieved independence, nation states that had to find their way in the world after the deep impact of the decolonisation process, which was often accompanied by considerable struggle. From this arose the so-called Third World, a new world of countries which did not wish to choose between the powers of the old world, the North and within it the East and West, and which therefore referred to themselves as the Non-Aligned Countries. It was also the era in which the United Nations arose, an attempt to order international relations in both political and economic respects. That happened on the basis of shared, chosen values, set out in a Charter, a constitution for the world, building on the achievements of the French Revolution and American War of Independence and on the liberal-bourgeois traditions of the 19th century. In the second half of the 20th century, the economy developed quickly: recovery and reconstruction after what it was hoped had been the last world war went hand-in-hand with the creation of social welfare states whose purpose was to serve the underclass and to guarantee them a proper living, and to allow them to participate in the economy, not only with their labour power, but also with their demand as consumers. This gave an important impetus to economic growth, which seemed to be able to sustain itself and which in turn was a stimulus to the development and the application of new technologies. In this way, rational thought persisted in science and technology, in economy and in politics. However, the rational insight into the importance of enlightened self-interest, which had partly formed the basis of salary increases for workers who had previously been exploited and later conjunctural stimuli to counteract economic crises, as well as the creation of the social welfare states after the Second World War, was not extended to the international level. The Third World remained poor and the gap between the rich and the poor increased. In the 30s economic deprivation was a feeding ground for fascism and violence. Warnings that that could be repeated at the international level and that rational enlightened self-interest demanded globalisation of the ideas of Ford, Keynes and Beveridge, received little attention.
The gradual shift in attention to the research topics that Tinbergen discussed in an earlier statement cited above reflected social developments. However, it was also a logical development as far as research methods were concerned. In his work, Tinbergen was able to establish a connection to what was to present itself after some time as a new, important and urgent issue. However, the topic also presented itself at the same time as a logical progression from the analysis of the preceding themes, in which dilemmas, preconditions, bottlenecks, ceteris paribus situations or variables considered up until then to be exogenous were encountered.
This began in the first period of his work when, as a physicist enthralled by an analogy between the trend-based and cyclical development of a number of physical and economic quantities, and struck by the social issues of his time, he switched to economics and started concentrating on dynamic developments in the economy, the study of change processes: the conjuncture and, later, economic growth and development. This led to a breakthrough in scientific thinking about economics: the statistical-mathematical analysis of the interrelationships between economic variables and changes to them. In doing so, Tinbergen contributed to explaining first the conjuncture of the Dutch economy during the depression of the 30s and following that also the international conjuncture. He did not do so out of a merely theoretical interest in exploring new areas and applying new methods, and by doing so establishing his own place in the world of economists, but because he was gripped by the important problems of his time: the unemployment and poverty of the main victims of the crisis, namely workers. For this reason, much of his work was published, not only in academic journals, but precisely in the form of reports and policy recommendations. It made an impression. He could not be ignored. He was also criticised. In the Netherlands, his reception in circles of the Vereniging voor de Staathuishoudkunde (Royal Netherlands Economic Association) were not undividedly positive. 7) Keynes responded kindly, but also with reserve, to Tinbergen’s models, which, according to Tinbergen himself, “had much in common with Keynesian thought.” His response was summarised by Tinbergen himself as “I’m not entirely in favour of it, but it is in good hands with him.” 8) Tinbergen did not allow himself to be held back, not because he wished to adhere to theories he had developed, for which he sought recognition, but because he saw this as the best method of making a scientifically responsible, policy-based, operational contribution to tackling the problems, the solution of which could not wait until the theory had been perfected. It is precisely that work, with regard to both its topic and method, that resulted in his being awarded the Nobel Prize for the science which was his second choice, while initially having been accused of alchemy. He ensured that he was always open to new ideas, for instance in the 60s when Irma Adelman applied new research methods to understanding the relationships between political, cultural and economic factors in the development process. 9) It is a form of “measurement without theory,” Tinbergen remarked, but he regarded it as a “complicated and dared combination of theory and testing” and as “an exploration of a new territory of science […] for which they deserve our admiration.” 10) In that assessment, expressed on the occasion of his acceptance of the Nobel Prize 30 years after the research carried out by him, an echo reverberated of the discussion which his breakthrough had elicited at the time.
It was clear that Tinbergen shifted his attention after the war to economic recovery and reconstruction in the Netherlands. He did that again in long-term policy perspectives, as the first director of the newly established Netherlands Bureau for Economic Policy Analysis (CPB), of which he, together with Hein Vos, was actually also the auctor intellectualis. He focused on macroeconomic planning, but actually, in addition to forecasting, his focus was mainly on systematically determining the best content and form for socio-economic policy in the short and medium to long term. As Tinbergen reflected on his work at the Netherlands Bureau for Economic Policy Analysis, this was done on the basis of policy objectives provided by politicians and “preferences which had to be substantiated scientifically, subject to the criterion of what generated the greatest prosperity for society as a whole.” 11) This led him to academic work on a range of topics: economic stability, income policy, employment policy, income distribution, tax policy, monetary policy, social security, investment policy, economic growth and technological change. It also resulted in increasing insight into the general system of political economy, culminating in 1956 in his famous study, Economic Policy, Principles and Design. 12)
Actually all of this was already an oeuvre without parallel. I cannot name any single contemporary of Tinbergen’s who has published in so many areas which, although they are interrelated, each offer material enough of themselves for the life’s work of an academic working in the area of economics. In all these areas Tinbergen produced relevant work which for decades was considered to be ground-breaking. In addition to the areas already mentioned, he published research that was consistent with the tradition of welfare economics and studies that may be considered to belong to institutional economics. Today not a single economist concerned with macroeconomic issues is able to present himself as a leading voice in all these sub areas at once. Is this because economics has since progressed so far that no single person can any longer be considered capable of overseeing the entire discipline, let alone making substantial contributions to all its sub areas? Perhaps, but that is nevertheless not a satisfactory explanation. The development in economics is unmistakable, although this did not by any means always result in relevant scientific insight. However, in the 20s to the 50s the economy itself was no less complicated than now. It was different, but just as complicated. For this reason, it remains astounding that a single person was able to make scientific contributions in so many sub areas of macroeconomics which were considered authoritative in his own time and for years afterwards. Perhaps Tinbergen was also the last of the classic economists, schooled in the humanities, who tried to develop a comprehensive view, and the first of the modern economists who attempted to refine that insight using the methods of the exact sciences. In the above-mentioned reflection, Tinbergen states: “In my opinion, the method of physics is simply the scientific method and it should be applied, but one has objects that lend themselves to this better, such as inert nature, and in addition objects that lend themselves less well to that, to which economics, sociology and the like certainly belong. That is a pity for those sciences, but one must do so as best one can.” 13) That epitomises Tinbergen: a real exact scientist, the method of physics that ‘should be applied’, which may perhaps be a pity for economics as a science, but not for economics as a social phenomenon. That social phenomenon had to be explained in all its interrelatedness and by doing so Tinbergen also reveals himself at the same time to be a scientist of the humanities, a classic economist, a qualification which he would forgive me for applying to him.
Tinbergen tried to see the interrelationships and systems in everything that he was involved in. A consequence of that was that there was never a huge jump to a new area, but simply the next step in research whose ultimate objective was to make it possible to describe the process in its totality: the next factor to be explained, the next explanatory variable, the next bottleneck or the next precondition. He was able in each instance to bring about a small breakthrough in the general insight in relation to a new topic, which other researchers could take further. This ensured that he was one of the most cited researchers in so many areas for many decades later. His work gave new impetus to others.
Consequently in the 50s Tinbergen set his sights on two topics that were new to him: firstly, the economic system, the economic order within which political economy was conducted, and secondly, the problem of the new social issue confronting the world, namely poverty in developing countries. These were new areas of research for him, but the attention to these areas followed logically from insights obtained earlier. In addition, the economic and political developments in the world turned these into topics of eminent social importance. The first area mentioned led him to publish on three themes: the welfare state, methods and techniques for planning, and the social procedures that should form the basis for this, and, thirdly, the issue of what the best economic system was within which socio-economic policy could be conducted, in other words the issue of the optimal economic order. Since then society has evolved further, both in the Netherlands and in most other Western countries. Political insights in relation to the welfare state, the desirability of planning, the ‘makeability’ of society and the best economic system have changed. More or less generally, there is a preference for a greater role for the market, greater restraint on the part of government, less social security, less planning and more decentralisation. However, it is questionable to what extent the underlying values and norms—freedom, equality, solidarity, responsibility, self-reliance and the like—have also changed. Tinbergen stated that values were exogenous: a different choice of values would result in different optima. This is the case, for instance, with regard to income distribution, which, as far as Tinbergen was concerned, ought to be ‘fair’, both in economic and social respects; that is, optimal according to one’s need and capacity to work. It also applies to the economic order. From Tinbergen’s point of view, all decisions ought to be taken at the lowest possible level, given the precondition that the effects on those who do not participate in the decisions, other than by acting as market players, must be discounted. That is certainly different to the market, the market, and, once again, the market, but also entirely different to centralised top-down management. For Tinbergen, planning was never much else than a systematic way of creating a reverse projection—scenario analysis based not only on possible, but also desired, outcomes.
In today’s educational programmes relating to the study of processes and policy in Africa, Asia, Latin America and the Middle East, the question is sometimes asked whether studying the findings of economists such as Arthur Lewis, Rosenstein Rodan, Hirschman and their contemporaries is still worthwhile. One could also ask this question with regard to Tinbergen’s work. The world has changed and developing countries with it. Globalisation, cultural conflicts, religion, ecology and the natural environment are aspects which received less attention in the studies of researchers in the 50s up until the 70s than is now the case. On the other hand, important aspects of the work of that period now receive far too little attention: for instance, the dualistic national economy, the terms of trade, the consequences of a colonial past and the possibility of a catalysing stimulus to investment. Equally important, the following also apply in this regard: the interrelatedness, the totality and the integrated nature of the development process. That is primarily what this is about. They were described and analysed by Tinbergen and his colleagues. Of course, they did not always have sufficient regard for all aspects. For instance, Tinbergen left issues relating to the implementation of policy and development programmes and projects to others. That was a pity, precisely because he was the person who had made such an important contribution to thought about policy and its subsequent phases, coordinated with each other through feedback loops. Issues of political power and cultural differentiation were also not topics discussed in Tinbergen’s analysis. However, he did refer to them as areas of research and gave them a place, still to be defined, in a comprehensive approach, just like issues in relation to the environment and physical scarcity, and did so in a more timely manner than other development economists. He did indeed raise all these topics for discussion, so that we were often surprised when we read through our lecture notes again. One could also say now that contemporary issues, for instance with regard to migration, ‘good governance’ and ‘global governance’, were also raised by him at the time.
Right from the start, Tinbergen saw the organisation of peace mainly as a necessity arising from the interrelationship between economic inequality, poverty, conflict, violence and war. Actually Tinbergen continued the line of thought into the 60s from the 30s, when employment and poverty had resulted in fascism and war. A repetition had to be avoided, which was the reason that he first advocated European economic co-operation and a shared increase in prosperity, so as to interweave the European economies with each other to such an extent that war would be in no one’s interests. In addition to the inherent necessity and ethical imperative of combating degrading poverty, this was an important ancillary consideration on which Tinbergen’s thought on ambitious, integrated and effective international cooperation between North and South was based. It was also the main motive behind thought developed by him on disarmament and the creation of global institutions with powers to deal with cross-border issues that constituted a threat to world peace.
In comparison to his two other main areas of attention—macroeconomic politics and development policy—Tinbergen’s thought on the organisation of peace were less quick to take root. Was he considered naïve? Or did people think that freedom had already been achieved—on the one hand, through the system of the United Nations and the Security Council and, on the other hand, through the equilibrium of nuclear deterrence—and that no further organisation was required? Did people think it was not necessary because they foresaw the end of the Cold War, albeit via a different route than that of the convergence of systems? If they did think that, then it has since been shown to be demonstrably incorrect. Apart from being ethically insufferable, poverty is also a threat to peace in an area of globalisation in which, in contrast to the crisis years of the 30s and the period of reconstruction of the post-war welfare states, combating poverty is not seen as being in the enlightened self-interest of entrepreneurs and the middle class, and has acquired the character of exclusion without any prospects and may result in violence in places entirely different to those where the exclusion takes place. That requires, on the one hand, linking peace policy to development policy, as Boutros Boutros Ghali, the previous Secretary General of the United Nations, proposed. Boutros focused on separate development areas, such as Mozambique or Palestine. Rightly so, the link between freedom and development is a condition for making both sustainable. However, it also requires an integrated global approach to the relationship between poverty, exclusion, neglect, resistance, conflict, violence and war. This proved to be the case, above all, after 11 September 2001 and was confirmed again after the war with Iraq. In that case, proposals such as those made by Tinbergen in his writings on the organisation of peace are not so naïve after all.
Indeed, for many Tinbergen was a master. What struck us? It was his modesty. His commitment without becoming obsessed. He maintained his distance. We were struck by the simplicity: everything is interrelated, but Tinbergen never made things complicated, but sooner made them transparent. We were struck by the beauty—I hesitate to use the word—of his models and consistent systemic analyses. We were struck by the powerful logic that emerged from this. We were struck by the values, made explicit as exogenous factors, in such a way that his research was not value free, but rational and true to reality. We were enthralled by his belief in the ability of society to be influenced by government policy, society’s ‘makeability’, without that ‘makeability’ being intrusive. We were struck by his choice time and again in favour of the optimum: optimal policy, optimal growth, optimal economic order and optimal income distribution. That search for an optimum was the expression of a natural tendency to give pride of place to values, to opt for ambitious objectives, but to determine the route to their achievement on the basis of solidarity and feasibility.
Tinbergen also listened to others, certainly to those with whom he worked and discussed. Whoever reads his writings, speeches and interviews, is struck by his systematic references to his colleagues, sometimes even decades later. He showered much too much honour on them, sometimes, at least that is what one felt—more than one was entitled to. However, that had a stimulating effect. I am one of his former students, who still regards Tinbergen as one of his most important teachers. In my own work I have always attempted to put into practice elements of what he taught me. I know that many have done so. The social relevance of someone like Tinbergen is also apparent from the fact that he is still cited and that many people in many countries still feel inspired by him and attempt to elaborate his insights in more detail, or to translate them into policy.
The social reality of today is so complicated and seems to be comprised of so many aspects and fragments that few can pretend to have a comprehensive overview. Nevertheless, that reality benefits from attempts to come to grips with it analytically and as a whole, as classic economists did and as philosophers do today. Such a comprehensive understanding can be obtained by testing the insights provided, by establishing their mutual systemic interrelationships, by not mixing values and facts with each other, and by modelling the perspective to be developed and to be presented in such a way that policy benefits from this, so that the processes described and explained can be pointed in a direction desired by society. That is what Tinbergen tried to do. It is a method of working which benefits society in the Netherlands, in the Western world, in developing countries and also globally, more than research that focuses on the square centimetre and more also than ideologically coloured philosophies that are not tested against the facts. That is certainly the case now that the new ideological opposition threatens to dominate the social process. The end of the opposition between East and West did not usher in the end of history, but was the beginning of new contradictions and new threats to world peace. These are also economic and partly ideological by nature. For this reason they are more dangerous. Such conflicts can only be controlled by searching for an optimum and never an extreme. Tinbergen’s lesson is still worthy of being followed.
Tinbergen’s insights into planning, the optimal order, international aid, the public sector, international cooperation, social issues and poverty are not in vogue. Each of these areas of attention has been replaced in political discourse by one and the same new point of departure: the market, the market and once again the market. The ability of governments to influence society, the ‘makeability’ of society, is taboo, poverty is viewed in some form as the fault of the poor or as a phenomenon belonging to a world other than ours that can be ignored with impunity, a very strong public sector is regarded as being at odds with efficiency and modern individualism, international development aid is regarded as a distortion of the market and counter-productive, and international cooperation is considered to be contrary to the new power relationships in the world at the start of the new century.
But is this so? Whoever saw that century begin with a number of unexpected large conflicts, first domestic and then international, which were often of both an economic and cultural nature, as a result of which it seems as if we are heading deliberately or otherwise towards a clash of civilisations, whoever realises that those conflicts have a huge potential for violence, that the continued militarisation still has the character of an arms race, that war cannot be banned, that the security of the world is threatened, that insecurity and violence can easily emerge on a global scale with modern communication technology, like a smouldering moorland fire, or with sudden explosions, here and there, realises how current Tinbergen’s plea is for the organisation of peace. Whoever also realises that all of this is closely related to the new phenomenon of the 21st century, namely the perfection of globalisation that was prepared in the 19th and 20th centuries, and that this has given rise to a new social issue, namely the exclusion of a global underclass, which is morally unacceptable and is also a potential source of global violence, will also realise that Tinbergen’s plea for combating poverty and for forms of global governance is more current than ever before. Whoever realises that the number of failed states has increased, as a result of which rogue regimes can seize power, and that an increasing number of terrorist vanguards are emerging which, making use of the increasing dissatisfaction with deprivation and poverty, increase instability in this world, cannot put his mind at rest with the idea that all of this will happen at some place far away. As in the case of Europe in the 30s of the previous century, in the world of today there is the combined threat of a major social issue, fascist answers to it and world war. Whoever still thinks that those global problems are made more complicated by global issues such as the deterioration of the natural environment and biodiversity, environmental pollution, a worsening climate, scarcity of energy and water, by applying new technologies without analysing the risks sufficiently, and by illnesses with global effects, such as AIDS and new viral diseases, which can easily acquire a pandemic nature, can only reach the conclusion that the necessity of global governance in the 21st century is even greater than in the previous century. Global governance is required, based on shared values and decision-making processes regarded worldwide as legitimate.
Even though he lived in three centuries, Tinbergen did not express an opinion on all the new issues of the 21st century. However, through the way in which he approached those of the previous two and by sketching the outlines of a policy that could have value in the future, he certainly has something to say about what is happening now, analytically and substantively, with regard to his method of thinking and work and also with regard to motives and ambition. The lesson he taught throughout 60 years is: see the interrelationships, try to understand them, build a model, make your values explicit, formulate an aim, be rational, plan for the future a little, rather than leaving it to forces which do not bear any responsibility for the whole, create a better system, influence the process, make policy makeable, search for the optimum, assume your public responsibility, together with others, combat poverty, give others assistance and enable them to assist themselves, divide wealth and scarcity fairly and reasonably, do not exclude anyone, do not do so to countries and large parts of the world’s population, understand that as a result not only a more just world will be created, but also that efficiency will be promoted and that, as a result, shared interests will emerge which will make further cooperation achievable, seize that opportunity, work globally and organise peace.
That, in brief, was Tinbergen’s vision. It has been ignored, but is not outdated. It is still a source of inspiration.