INTERNATIONAL POLITICAL ECONOMY SERIES

General Editor: Timothy M. Shaw, Professor of Political Science and Inter­national Development Studies, and Director of the Centre for Foreign Policy Studies, Dalhousie University, Nova Scotia, Canada

Recent titles include:

Manuel R. Agosin and Diana Tussie (editors) TRADE AND GROWTH: NEW DILEMMAS IN TRADE POLICY

Mahvash Alerassool FREEZING ASSETS: THE USA AND THE MOST EFFECTIVE

ECONOMIC SANCTION

Robert Boardman POST-SOCIALIST WORLD ORDERS: RUSSIA, CHINA AND THE

UN SYSTEM

Richard P. C. Brown PUBLIC DEBT AND PRIVATE WEALTH

John Calabrese REVOLUTIONARY HORIZONS: REGIONAL FOREIGN POLICY

IN POST-KHOMEINI IRAN

Jerker Carlsson, Gunnar Kohlin and Anders Ekbom THE POLITICAL ECONOMY OF EVALUATION

Edward A. Comor (editor) THE GLOBAL POLITICAL ECONOMY OF COMMUNICATION

0. P. Dwivedi DEVELOPMENT ADMINISTRATION: FROM UNDERDEVELOPMENT TO SUSTAINABLE DEVELOPMENT

Steen Folke, Niels Fold and Thyge Enevoldsen SOUTH-SOUTH TRADE AND DEVELOPMENT

Anthony Tuo-Kofi Gadzey THE POLITICAL ECONOMY OF POWER

Betty J. Harris THE POLITICAL ECONOMY OF THE SOUTHERN AFRICAN PERIPHERY

Jacques Hersh THE USA AND THE RISE OF EAST ASIA SINCE 1945

Bahgat Korany, Paul Noble and Rex Brynen (editors) THE MANY FACES OF NATIONAL SECURITY IN THE ARAB WORLD

Howard P. Lehman INDEBTED DEVELOPMENT

Matthew Martin THE CRUMBLING FA<;ADE OF AFRICAN DEBT NEGOTIATIONS

Paul Mosley (editor) DEVELOPMENT FINANCE AND POLICY REFORM

Tony Porter STATES, MARKETS AND REGIMES IN GLOBAL FINANCE

Stephen P. Riley (editor) THE POLITICS OF GLOBAL DEBT

Alfredo C. Robles, Jr FRENCH THEORIES OF REGULATION AND CONCEPTIONS OF THE INTERNATIONAL DIVISION OF LABOUR

Timothy M. Shaw and Julius Emeka Okolo (editors) THE POLITICAL ECONOMY OF FOREIGN POLICY IN ECOWAS

Frederick Stapenhurst POLITICAL RISK ANALYSIS AROUND THE NORTH ATLANTIC

Deborah Stienstra WOMEN'S MOVEMENTS AND INTERNATIONAL ORGANIZATIONS

Larry A. Swatuk and Timothy M. Shaw (editors) THE SOUTH AT THE END OF THE TWENTIETH CENTURY

Amo Tausch (with Fred Prager) TOWARDS A SOCIO-LIBERAL THEORY OF WORLD DEVELOPMENT

Nancy Thede and Pierre Beaudet (editors) A POST-APARTHEID SOUTHERN AFRICA?

Peter Utting ECONOMIC REFORM AND THIRD-WORLD SOCIALISM

Sandra Whitworth FEMINISM AND INTERNATIONAL RELATIONS

State and Law in the Development Process Problem-Solving and Institutional Change in the Third World

Ann Seidman Adjunct Professor School of Law Boston University

and

Robert B. Seidman Professor of Law and Political Science Boston University

First published in Great Britain 1994 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world

A catalogue record for this book is available from the British Library.

ISBN 978-0-333-60148-8 ISBN 978-1-349-23615-2 (eBook) DOI 10.1007/978-1-349-23615-2

First published in the United States of America 1994 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth A venue, New York, N.Y. 100!0

ISBN 978-0-312-12171-7 (cloth)

Library of Congress Cataloging-in-Publication Data Seidman, Ann Willcox, 1926--State and law in the development process : problem-solving and institutional change in the Third World I Ann Seidman, Robert B. Seidman. p. em.-- (International political economy series) Includes bibliographical references and index. ISBN 978-0-312-12171-7 (cloth) I. Law and economic development. 2. Developing countries­-Economic policy. I. Seidman, Robert B. II. Title. III. Series K3820.S345 1994 338.9'009172'4-dc20 94--1156

© Ann Seidman and Robert B. Seidman 1994

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WI P 9HE.

Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

II OS

10 9 8 7 04 03 02 01

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CIP

To our grandchildren: Annie Neo, Semane, Nika, Tumi, Seth, Anita, Benjie, and Gregor

Contents

List of Boxes

List of Maps and Figures

List of Tables Preface List of Acronyms

Introduction

The argument of this book The global context On the use of words On the use of this book

PART I THE PROBLEM

1 The Paradox

The dimensions of the paradox The Chinese experience Demands for alternative development strategies Towards a rational approach Questions and issues for research

2 State and Law in Third World Poverty and Underdevelopment

A model of third world poverty and powerlessness How the law buttressed and created the institutions

of the dual economy and the oligarchy The law of reproduction of institutions The instrumental use of the legal order The law of non-transferability of law Conclusion Questions and issues for research

vii

XI

xiv

XV

xvii

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1

2 4 6 6

11

II 20 24 25 26

27

27

32 36 39 44 52 53

viii Contents

PART II DEVELOPMENT THEORY AND PRACTICE

3 Of Theory and Justifications and their Uses 57

Research, justifications, decision-making rules 57 The uses of theory 59 The criteria for assessing theory 62 The elements of theory 66

. Questions and issues for research 67

4 A Participatory Development-Oriented Research Methodology 69 Ends-means 69 Creeping incrementalism 72 Problem-solving 75 Conclusion 84 Questions and issues for research 85

5 Which Grand Theory? 86 The function of perspectives 86 Market theories and liberalism 92 Basic needs/structuralism 101 Transforming institutionalists 105 Conclusion 112 Questions and issues for research 113

6 Categories for Generating Middle-Level Propositions Concerning Law's Underbearer Role 115

The function of categories in policy-oriented research 115 What categories? 116 Towards a more adequate research agenda 122 Conclusion 125 Questions and issues for research 127

7 Implementing Institutions: From Courts to Bureaucracy 128

The bond between making and implementing law 128 A theory to guide investigations of implementing institutions 129 Courts as implementing agencies 132 The bureaucratic paradox 138 Questions and issues for research 140

Contents ix

PART Ill RESTRUCTURING THE STATE

8 The Fatal Race: The Rise of the Bureaucratic Bourgeoisie 145

146 153 162 166 168

The difficulty: the bureaucratic bourgeoisie How law created the bureaucratic bourgeoisie Entry into the economic ruling class Conclusion Questions and issues for research

9 Transforming the Colonial State: Controlling the Bureaucratic Bourgeoisie 170 Competitive elections for representative government 171 Control from the top: of courts, ombuds, and others 177 Participation in political affairs 182 Civil society as countervailing force 188 Conclusion 194 Questions and issues for research 195

PART IV TRANSFORMING THE POLITICAL ECONOMY

10 Of Plans and Markets 199 Third world planning failures 199 Why the third world's dismal planning experience? 203 Planning for development 211 Conclusion 223 Questions and issues for research 223

11 Restructuring Foreign Trade 225 The difficulty: trade and dependence 225 Large-scale explanations 226 Unequal bargaining power in foreign trade 227 Third world counter-measures 239 Explanations for the failure of third world trading

companies 247 Implications for alternative strategies 249 Conclusion 250 Questions and issues for research 250

X Contents

12 Rethinking the Agricultural Base 253

Alternative strategies for the third world's agrarian crisis 254 Producer cooperatives: difficulties and explanations 260 Summary and conclusion 274 Questions and issues for research 275

13 Perverse Industrialization 278

Perverse industrial characteristics 280 Forty years of third world industrialization 282 The investment decision makers 289 Conclusion 302 Questions and issues for research 303

14 Financial Crises 305

Pervasive debt and inflation 305 History and grand theory 307 Generating middle level propositions: the Chinese

experience 322 Towards improved bank credit policies 327 Summary and conclusion 328 Questions and issues for research 329

15 Welfare and Development: The Case of Education 331

The focus on education 331 Educational expansion and budget deficits 332 Explaining educators' behavior 343 Alternative educational strategies 348 Summary 349 Questions and issues for research 350

16 Conclusion 351

Bibliography 355 Index 393

List of Boxes

1.1 China's third world features 21 1.2 China and the IMP 22 2.1 The underdevelopment of Western Zambia 29 2.2 The oligarchy's social cohesion 31 2.3 Kenya's legal order 33 2.4 Colonial law in the Gold Coast (now Ghana) 34 2.5 Good men and good government 37 2.6 The absence of legal and institutional change in Africa 38 2.7 Institutions and role occupants 40 2.8 How Africa tried to copy Hong Kong law 44 2.9 The 'little dragons' special circumstances 48 2.10 The lessons of comparative law 51 3.1 The dangers of theory as metaphor 60 3.2 Examples of middle-level propositions 63 3.3 Theory as a tool shaped by reason informed by

experience 64 3.4 Evaluation mechanisms as feedback loops 65 4.1 Scenarios: an ends-means methodology 72 4.2 Hacking at social problems, short term 74 4.3 The dangers of muddling through 75 4.4 The meaning of 'problem-solving' 75 4.5 An explanatory hypothesis as map 77 4.6 Distinguishing causes from conditions: one example 78 4.7 Three hidden costs of institutional change 81 4.8 Some available legislative review mechanisms 82 4.9 Building theory through problem-solving 82 5.1 Can we falsify grand theory? 89 5.2 In the critical mode: a restatement of theory

as an ideal type 91 5.3 The neoclassicists' model of perfect competition 92 5.4 Libertarianism's European roots 96 6.1 Categories in relation to grand theory 116 6.2 Laws do change behavior 119 6.3 The Coase theorem and Ellickson's diswarrant 120 6.4 ROCCIPI: a research agenda 125 6.5 Structuring the discourse: a Chinese example 126

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xii List of Boxes

7.1 An implementing agency as a team 130 7.2 Implementing processes reflect and affect policy 131 7.3 History and the myth of judicial implementation 132 7.4 Courts cannot make the polycentric decisions required

for development 136 7.5 Weber's ideal-type bureaucracy 138 8.1 Bureaucratic wealth and power 147 8.2 The uneven incidence of ethnic and religious violence 151 8.3 No accident: the Zimbabwe case 153 8.4 Federation: cause or cure for irrational politics? 158 8.5 Idi Amin's new land reform law 164 9.1 Dismantling democratic elections in Ghana 172 9.2 Secrecy laws a mask for power 175 9.3 Some useful curbs on discretion 179 9.4 Non-participatory law-making: Zimbabwe's labor law 186 9.5 Human rights and civil society 191 9.6 Government control over trade unions 192

10.1 Socialism? 201 10.2 The inevitability of government intervention 204 10.3 Frustrated local initiatives in Zambia 208 10.4 Foreign partners' influence in Tanzania 209 10.5 Planning in Lesotho 210 10.6 Filling the gaps 214 10.7 Steel as a 'bottleneck' industry 215 10.8 Transforming planning in China 221 11.1 The world's mushrooming oversupply of oil 229 11.2 Diversification of the copper companies' global holdings 231 11.3 New food-beverage-tobacco conglomerates 234 11.4 Immigrant traders: a colonial strategy 237 11.5 The costs of nationalization: Zambia and Chile 240 11.6 Cocoa marketing in Ghana 243 12.1 Peasants and the tobacco transnationals 255 12.2 Women and the land 257 12.3 TNCs and Tanzanian agriculture 259 12.4 When might producer cooperatives make sense? 261 12.5 China's experience with producer cooperatives 263 12.6 The legal structure of producer cooperatives 265 13.1 Job creation in Tanzania's textile industry 281 13.2 'Paying to lose our jobs' 283 13.3 Nigeria's experience with TNC management of public

enterprise 293

13.4 13.5 13.6 13.7 13.8 13.9 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8

List of Boxes

The Tanzanian fertilizer plant Maximizing managerial interest in China China's restoration of hierarchical decision making 'Business principles' in Zambia The impact of privatization Worker participation may increase productivity Import and export licensing, and corruption First world banks and third world debt The neoclassical theory behind currency devaluations Devaluation and wages First world control of the IMP Anglo's reach Devaluation and inflation in China Specialized state banks Welfare costs and the debt crisis Elite demands and social services in Tanzania China's educational effort 'Learning from the peasants' in China Neoclassical economics in post-Mao China Discrimination not in law but in fact The colonial legacy: textbooks, curricula, examinations Austerity and textbooks

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294 295 296 298 300 302 307 309 310 312 316 318 324 327 333 334 340 342 343 344 345 347

List of Maps and Figures Map

World-wide per capita distribution of income by country, 1990 8

Figures

1.1 Comparisons between low, middle, and high income countries, 1980s 12-14

1.2

1.3

2.1 2.2

6.1 6.2 7.1

11.1 11.2 12.1

13.1

14.1

14.2

14.3 14.4 14.5

15.1 15.2

15.3

Income distribution skew in third world countries compared to first world countries 14 Indices of the impact of crisis on the third world in the 1980s A model of third world poverty and powerlessness Factors influencing role occupant's behavior in the face of law

18-19 28

Kelsen' s model of the legal system A model of the legal system A model for understanding complex organizations US transnational corporations' share of third world exports Indebtedness of selected leading coffee exporters Agriculture's changing role in low, middle and high income countries Industrialization by country income group (1965 and 1989) Mounting third world debt as percent of GNP, 1965-80, as compared to 1980-88 Distribution of gross domestic product as percent of total GNP Leading banks in developed economies ( 1985) Banking in Nigeria Bank concentration in Brazil and South Korea (assets in 1985) Investment and Gross Domestic Product Government expenditure on social welfare in lower-

45 117 118 131 229 233

254

279

306

313 317 321

322 333

middle income countries 336 Increased attendance and percentage of school age inhabitants in school 338

xiv

List of Tables

2.1 10.1

11.1 11.2

14.1

Major characteristics of the 'little dragons' The conditions in which both market-oriented and socialist theories tend to suggest the necessity of direct government intervention Long-term debt of major copper exporting countries The ownership and market shares of the world's leading copper mining companies, 1985 Third world investment decline in the 1980s

XV

47

219 231

231 306

Preface

We began to write this book shortly after our year-long stay in China as Fulbright Professors in Peking University ended abruptly with the suppression of the 1989 Tian'anmen Square protests. We had gone to China after spending 11 of the preceding 27 years teaching and con­ducting research in the universities in the new nations of Ghana, Ni­geria, Tanzania, Zambia and Zimbabwe. We came to realize that, despite the gulf between them in terms of distance, history and culture, China confronted many of the same kinds of problems as did the 50 or so much smaller African nations. In our discussions with Chinese, caught up in the excitement of the 1980s Reforms and Open Policy, we dis­covered most valuable, not models and sophisticated methods imported from the United States, but what we had learned in our years studying African development.

Our professional interests had stimulated us early on to consider the problems of law and development, an interest that inescapably led us into issues of legislative drafting. We soon realized that no place did there exist an adequate theory relating law to development, let alone one specific enough to guide the process of translating policy into the kinds of law necessary for development. Little by little, the theory set forth in this book evolved. That evolution took place not only in the context of our teaching and research, but also in our practical work: currently, as co-chief technical advisors in a five-year United Nations Development Programme (UNDP) project to draft 22 priority economic laws for China (using that as the occasion to train Chinese drafters in legislative theory and methodology); earlier in drafting and consulting for various African governments; teaching research methods and draft­ing to southern African students and lawyers at universities in Tanza­nia, Zambia and Zimbabwe; teaching and conducting workshops in law and development in Africa and the United States; and, over the years, supervising hundreds of students in policy-oriented research and in legislative drafting courses.

Obviously, one or two isolated theoreticians working alone cannot today achieve an adequate understanding of the complex processes of development. Scholars and practitioners must continually share their efforts to develop, test, and learn better theories and methods. For that reason, we could never even list by name, far less adequately express

xvii

xviii Preface

our appreciation to the many people who have helped to think through the hypotheses proposed in this book. We would have to start with the thousands of our students and colleagues in Africa and China, as well as in Wisconsin University, Clark University's International De­velopment Program, and the law and development seminars and the legislative drafting program of Boston University Law School. With all of these, over the last three decades, we debated the theoretical and methodological implications of the evidence generated by the rapidly changing global system. We have cited some of our colleagues' and students' written work (some as yet unpublished) in our bibliography, but these hardly begin to tap the richness of the on-going critiques and analyses which they have contributed to our own understanding. While we remain responsible for the interpretation (and of course the misinterpretations) presented in this book, we hope they all under­stand our appreciation of their contributions.

Beyond that, we would like to express our warmest thanks to many individuals and friends who, in the course of specific projects, helped to develop the theory and methodology here proposed. Space here permits mention of only a few: Denny Kalyalya, Khethiwe Mhlanga and Joseph Semboja helped to develop the pilot participating learning process in southern Africa. Qi Haibin, Di Rui Peng and Zhao Hong Cheng trav­elled with us throughout China, helping us to meet people, interpret­ing for us, and hastening our own learning. Ntalaja-Nzongola and many other colleagues helped to create the Task Force for Sustainable De­velopment in Africa which adopted a participatory, problem-solving methodology and, with leadership from Bereket Selassie and Adeno Addis, undertook to tackle the relationship of law to development. Zhou Qing Pei invited us to become consultants for the UNDP project which turned out to be an on-going laboratory for collaborative investiga­tions directed towards improving the use of law for social change. Colleagues at Boston University School of Law were generous with time and criticisms, especially at the regular Thursday afternoon faculty seminars. We learned a great deal about the state's economic role from frequent discussions with Neva Makgetla. We benefited greatly from Edward Rubin's and John McEldowney's discriminating critiques of the manuscript. A small army of researchers ferreted out materials we never even knew existed, and sometimes provided invaluable back­ground papers; the latest of many were Grace Pasigin, Cindy Westervelt and Ben Apt.

We thank our friends who helped with the detailed and tedious business of putting our inchoate notions into a manuscript: Tim Shaw, our

Preface xix

editor, whose many helpful suggestions have proved invaluable; Joel Sarnoff and Jim Mittelman, whose detailed criticisms helped us to think through many of the ideas; Ellen Leary, whose sharp eye pinpointed and suggested ways to strengthen weak formulations; Yu Zhou who prepared the charts; and Caye Sarber and Karen Riley who drew the diagrams. Especially, we are eternally indebted to Elizabeth Teixeira, for her tolerance, her sense of humor, her hard work and for innu­merable favors above and beyond the call of duty.

Finally, we thank our children, who bore with us patiently and tol­erantly over the many years when we yanked them mercilessly around Africa, and bored them (and now our grandchildren) to tears by end­lessly discussing development theory at breakfast.

Boston

ANN SEIDMAN

ROBERT B. SEIDMAN

List of Acronyms

CARIFTA CIA GDP GNP IMP LAFTA NICs NIEO NGO OPEC CICEC SADC SELA ROCCIPI

UN UNECA US AID vw

Caribbean Free Trade Area Central Intelligence Agency of the United States Gross Domestic Product Gross National Product International Monetary Fund Latin American Free Trade Area Newly industrializing countries New International Economic Order Non-governmental organization Organization of Petroleum Exporting Countries Copper Intergovernmental Council of Exporting Countries Southern African Development Community Sistema Economico Latinoamericano Mnemonic for remembering categories of possible explana­tions of role occupants' behaviors (see Box 6.4) United Nations United Nations Economic Commission for Africa United States Agency for International Development Volkswagen (automobile manufacturer)

XX