The Programming Approach and the Demise of Economics

The Programming Approach and the Demise of Economics Franco Archibugi The Programming Approach and the Demise of Economics Volume I A Revival of Myrdal, Frisch, Tinbergen, Johansen and Leontief Franco Archibugi Rome, Italy

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This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Preface To the Three Volumes of the Trilogy

This book, as with many others of my writings from this period, gathers together the dispersed vestiges of a life of research on the methodology of planning, mostly spent at the ‘Planning Studies Centre’ of Rome,1 a non- profit associative research Institute, which was founded in 1963 by a limited but qualified group of colleagues2; and for which I was the director for many years. My thanks go, above all to this very modest research institution—in its turn funded occasionally by the (Italian) National Research Council (CNR)—which and from other interested to ours researches—has allowed me to survive scientifically while going against the predominant conventionalism (and despite the absence of favorable conditions for independent research in Italy). My sincere thanks therefore goes to all those colleagues, members of the staff, collaborators, librarians, donors, researchers, more or less precarious or voluntary assistants, who have helped the Centre survive as a non-profit research organization, despite the numerous frustrating difficulties; giving me those opportunities that my work as a full professor in several Italian universities, had not given me. However, concerning the contents of this Work, I must bestow an entirely special recognition to a number of economists (the majority of whom sadly are no longer living) for the personal role they had in the development of the ideas of which this work is based. These are economists with whom, many years ago, I had the benefit of direct and personal v vi Franco Archibugi The ‘Programming Approach’ and the Demise… contact and who have had a great influence on me. The most important of them are Gunnar Myrdal, Ragnar Frisch, Jan Tinbergen, Leif Johansen, Wassily Leontief, and mind associated.3 The acknowledgement of the role that they have had in the evolution of my critique to the ‘determinist’ economics will be testified throughout this Trilogy book by means of many selected quotations of those authors, that enter into various arguments of Programming approach. However, since my intellectual relationship with them was interwoven even from some more important personal contacts, it is fair to also evoke some forms and circumstances of this contact. I will do it—without overloading this Preface—with some brief evocative notes of such relations with each of them, in the Appendix 1 (at the end of Vol. I of this Trilogy).

Dedications

On a more personal level, I would like to dedicate this Trilogy to a dear, kind, friend of mine, the late Federico Caffè, who was, a very appraised Italian economist, very engaged humanly and socially, and who gained many merits, fortunately widely recognized and very mourned in Italy, even after his painful and anomalous disappearance, devoted to the education of young Italian economists.4 With him, I had the opportunity to discuss very intensively (since the early days of our friendship, between the ‘forties and sixties’ of the last century, the themes of this book, that he encouraged me to develop in times when they were still at their dawning and imprecise in my own spirit. And overall I feel great regret now for having missed the chance to show him, through this work—and also to discuss again with him— some outlets of ‘scientific’ significance of the political economy, to which many years of common reflection and reading (and related discussions) have brought me. I cannot fail to acknowledge the role played in the formation of the concepts of this book by my assiduous, enduring, absorbing, participation to the ‘economic programming’ (programmazione economica), in Italy, and at international cases, to which I have dedicated a good deal of my professional and academic activities. I think that this experience has Franco Archibugi Preface to the Three Volumes of the Trilogy vii been a permanent and concomitant factor also of the theoretical visions to which I arrived in this work (as in many other of my writings). I believe this experience has been, the ‘conditio sine qua non’ of this book, its indispensable vital lifeline. But that experience has been, within myself, also the material factor of the delay and slow maturation of my theoretical reflexion, since I consumed so much energy and time in that experience (with not very comforting final results, indeed), that I have risked that this book would never materialize (like many other writings belonging to the same theoretical recapitulation and that I do not believe I have the time to conclude before my exit).5 In that experience, indispensable on one hand, but also too absorbing and dispersive from the other, a central, and recursive, role has been played by another personal friend that I esteemed and liked, Giorgio Ruffolo. Together with him, (he engaged in more offices, both political and managerial of that experience as top level public Officer responsible— from 1964 to 1974 in Italy, of the political responsibility, which I shared and covered with him a good deal of the way during this practical experience) without his support I would not have had the opportunity to test, even in a precarious and short-lived manner, the hypothetical construction of that Planning Accounting Framework on the scale of an entire country (Italy). Few (I would say none) of my colleagues from other countries, have had the opportunity to experience, in a concrete political, environment far more equipped and consolidated in men and means, than in mine. However, it may be of some interest, even from a scientific point of view, to explain the factors which have—until the date of this book’s publication—delayed the ‘scientific appointment’ of this book with my dear friend Federico Caffè (aforementioned), that has been at the same time, as said, a kind of scientific appointment with ‘Economics’ itself, (in terms of Economic Policy that was not—it’s best if I say that right away, with clarity, among the most enthusiastic and rich in results, but rather very critical from a ‘scientific’ standpoint.7 The main factor of this delay is that, into the economy of my time, I have preferred to engage myself with concrete (in corpore vili) experiments in planning (through studies of national, territorial, regional and urban viii Franco Archibugi The ‘Programming Approach’ and the Demise… planning)6 by assisting political decision-making processes, and by col- lecting a multitude of ideas and experience, based on these experiments, which are capable of outlining—in positive terms—an adequate ‘theory’ or, better, ‘methodology’ of planning. In fact, my instincts were pushing me to outline this ‘theory’, or rather ‘methodology’ of planning, as based on an integrated and multi-disci- plinary approach, which could definitively go beyond an academic debate on Economics. I thought it’s more urgent and constructive to dedicate myself to the demolition (negatively) of the determinist (or positivist) approaches in Economics, and these—ambiguous visions—of the economic policy, already performed by numerous colleagues economists of the type called ‘heterodox’ (‘evolutionist’, ‘institutionalist’, ‘realist’, ‘neo-marxist’). In other terms, I was resistant to being caught in the academic debate without having a clear idea of how to substitute the dominant ‘deterministic’ approach with an alternative system more operational of integrated planning starting from completely different criteria in respect to those predominate in academic life, as far as political-economic actions are concerned. This engagement (in planning theory and methodology) has therefore been my priority ‘scientific’ engagement, especially because it enables me to set a safer pace towards a critique of the classical (or neo-classical) economic approach, a critique which I have never renounced due to my philosophical background, and which was implicit in my approach to planning itself.7 Another factor in the delay has also been the fact—important in itself—that in the nineteen sixties, I found in economists such as Frisch, Tinbergen, Leontief and Johansen, some answers supporting my position developed previously with my background of historical-philosophical studies, particularly in the traces of ideas and arguments of Gunnar Myrdal’s books. These experiences imposed on me a severe reflection on building a rather new methodological basis—it seems to me—that only since a few years I have achieved in rendering clear to me and presentable with this work. I have been privileged with opportunities, half occasional Franco Archibugi Preface to the Three Volumes of the Trilogy ix and half strongly-researched, to encounter and obtain personal help from these authors (to which I dedicated the Vol. I of this work, in the final period of my life, just in time to receive from them encouragement and good ‘viaticum’ ). I remember all of them (in the Appendix), with reference to the occasions of interaction had with them, and other colleagues and scholars that have been of great utility to me. These encounters obliged me to deepen technical aspects outside my background which have taken up much of my available time. I first found my footingin the arguments of Gunnar Myrdal, who had, in the meantime, expanded his survey on the political element on the development of economic theories to the field of epistemology through an essay in 1971 which I consider a jewel of penetrating scientific thought: ‘How Scientific are the Social Sciences?’.8 I consider this essay Myrdal’s most important contribution, not only with regards to Economics, (which comes out of it fairly bloodied), but also to all the ‘sciences of man’ (so to speak). Above all, however, I found support for my tormented position in Ragnar Frisch’s equally tormented essays which he was producing in those years (the nineteen sixties) in order to distinguish in matter of economic policy, the little help drawn from the ‘descriptive’ modeling of growth (from its disregarded ‘growth models’, that in that epoch were the rage) and on the contrary from proper ‘decisional’ modeling of which he was trying to formulate a general methodology. All this brought me to a further deepening, with the problematic implementation of real economic planning processes, new methods and instruments of accounting, and conjointly a deepening of the question of objectivity on the one and validity of economic theorems at the basis of modeling. And both of which were fundamental to the theory’s own capacity to give not only satisfactory but also useful answers for the implementation of those processes. The result of this help and reflection can be found in the Chaps. 1–9 of this Vol. I, justly dedicated to Gunnar Myrdal, Ragnar Frisch, Leif Johansen, Jan Tinbergen, Wassily Leontief, and some others who have contributed to developing what—in the words of Frisch—we may call a x Franco Archibugi The ‘Programming Approach’ and the Demise…

‘Programming approach’, and to leaving behind an approach from him defined together( Tinbergen) as ‘Pre-programming’. Since my whole life (as I imagine is true for many other scholars) has been a constant interweaving of practical and theoretical experiences (and by ‘practical’ I don’t just mean everyday life events, which have also, in any case, been quite conditioned by my research interests), I have been obliged to recall my personal friendships and occasional relationships which have been the sources of my reflections and of my intellectual formation, as shown in this book. However, I cannot avoid saying that the outcome I most wish and hope to see from this book, is not an ‘academic’ debate on its arguments, but rather a stimulus towards a more rapid abandonment by official Economic Policy9 of the theoretical rigmarole between schools of thought in order to shift the focus of attention from a theoretical debate (which I consider largely obsolete) to a concrete process of strategic planning; and towards experimentation with such a process throughout the numerous operational levels which management of public affairs has developed.10 To do this, the governmental apparatus of the most advanced countries and of the international organizations do not yet dispose of necessary technical means. For the spontaneous development of the socio-economic structural changes, and at the same time, of that of the situations and issues related to these situations, and also to the ‘visions’ and policy choices to be made, did not adequately accompany the development of knowledge and technical knowledge. Knowledge and techniques that I would group together and synthesize in two essential inter-dependent factors: a suitable information system and an adequate formation of the governmental and social operators. In other words, we still do not have at our disposal an information structure that can be able to feed and activate that planning process and framework, that is a ‘knowledge framework’ of the socio-economic phenomena, in programmatic key, (i.e. capable, at its turn, to concerns and allows, in a realistic way, a support of the decisional process and the political choices).11 Moreover, we still do not have in governmental institutions around the world, and in their decision-makers, sufficient preparation Franco Archibugi Preface to the Three Volumes of the Trilogy xi and expertise to control and implement the decisional processes with informed and aware methods and procedures. Structured information system and operators skills are closely related, as said, organically interdependent: in principle, ‘no steps can be made in one direction if no steps are made in the other’. This means that we need simply proceed in both directions simultaneously, otherwise the innova- tion will not/does not happen, it marks time. However, it would be a mistake to affirm—as people often say—that, without realistic and positive steps in one direction, it is impossible to get a successful result in any direction. Perhaps we need to accept making unrealistic steps probably destined for failure and abstraction, pro tempore, in one direction as condition to get more realistic steps in the other. The alternative would otherwise be cultural, political, economic immobility. It is this immobility that we should discuss, and which should concern us in themes of governance at any operational scale of public interest and public action. Immobility that we have on the other hand observed in the world that counts, with respect to early expectations formed (say in the nineteen sixties and nineteen seventies); at the time when, the arguments that this book revives and relaunches, first arose. Immobility in the recordable governance, in spite of the surprising progress that has occurred, in the same period, in the field of the scientific acquisitions and technological applications. For a long time, I took the side of the people that rightly dedicated themselves to the didactics of these processes, swimming strongly with a kind of ‘Myrdalian’ ‘Against the stream’, and pocketing up slothful skepti- cism, operational obstacles, many lethal disappointments and hard consensus. In the time, I have left—as I have said in the final lines of another book12 of mine; I can only hope to contribute to building the foundations of a new way of managing or governing the economy of a community, at all scales, national, international and local.13 Such new ways of managing—of which people feel an urgent need—I hope will soon come to include also the entire community of mankind, in a cosmopolitical and federative sense. I am, therefore, very grateful to xii Franco Archibugi The ‘Programming Approach’ and the Demise… everybody, colleagues and friends, who have helped me to give to this great effort, this little contribution in pursuit of labor’ and life’s purpose. A last acknowledgment to the people that have cooperated and allowed to the material publication of this Trilogy, and its special performances. First of all to the team of Planning Studies Centre of Rome, that have helped me in selection and gathering the quotations, extracted from the books of authors chosen, setting the different texts for each of the three volumes of the Trilogy; people that (has) have scanned the texts chosen and introducing the texts in the formatting of manuscripts, helping also in English correction of manuscript, and taking care and ordering the Bibliographies of the Trilogy. These people are younger scholars, in recursive stages and phases of the work, like Elena Terentii, (Moldavian, citizen), Nicolas John Neiger (British cit.), Krystal Nicole Crumpler (American cit.), Claudio Bandini (Italo-Argentine cit.), Francesca Aka (Italo-Ivorese, cit.), Sorayya Khan (Italo-Pakistan, cit.), Joshua Homan (American-Hungarian, cit.), Gabriele Skaiste (Lituanian, cit.), Akash Pal (Italo-Filipino, cit.). But, leaving aside this Trilogy, how may I forget to thank also for the amorous assistance of the person that has been along 60 years, my wise and constant daily company of my own life, named Fulvia. In second important line I wish to thank very much, the team of copy- editors employed by Palgrave Macmillan, bringing the name of historical publisher of London, under the actual direction of the Dr. Rachel Sangster, head of Economics and Finance, Publisher Economics, who suggested, with the favorable support of the same House, and the set of external referees consulted, the form of Trilogy to the material proposed and other interesting editorial suggestions. Moreover, I wish to address a special thanks of gratefulness to Mr. Joseph Johnson, belonging to the above Palgrave Macmillan team, who has taken care of the special nature of the book in question, proposing the exemption from fees for the quotations, based on a (non-commercial) ‘fair using’, essential condition to make feasible the editorial choice, praiseworthy of the Macmillan’s tradition, meta-nationally beloved. Franco Archibugi Preface to the Three Volumes of the Trilogy xiii

Beyond the case of the copyright question, pertinent to the publishing House, I feel therefore, in any case, to be very grateful, to all institutions and publishers that accepted my appeal to permit me the publication of many quotations in the three Volumes of the Trilogy without copyright conditions. They are:

–– The Department of Economics of the University of Oslo, of which I have sacked the writings of Ragnar Frisch –– TheMemoranda , the periodical publication of it, received currently by me for initiative of Frisch himself and by her librarian. –– The kindness of the Penguin Random House, for quot. From G. Myrdal, Objectivity in Social Research. –– Taylor & Francis, publ. for quot. of G. Myrdal, The Political Element in the Development of Economic Theory –– Palgrave Macmillan, publ. for quot. of G. Myrdal, Against the Stream: Critical Essays on Economics (…). –– Sage, publ. for quot. of G. Myrdal, Value in Social Theory: a selection of essays on methodology –– Yale University Press for quot. of J. Tinbergen, Central Planning (1964) –– Elsevier, publ. for quotations of L. Johansen, Lectures on Macro- economic Planning –– idem. for quot. of J. Tinbergen, Lessons from the Past –– Wiley pub. for quot. of W. Leontief, Essay in Economics Vols. I and II –– The Little and Brown Co., for free quotations of G. Soros.The Crisis of Global Capitalism –– Royal Institute of Technology (Sweden) for quot. of S.O. Hansson, Decision Theory –– Princeton University Press, for quot., from J. Friedmann, Planning in the Public Domain: from Knowledge to Action –– idem, for quot. of J.A. Sinden & A.C. Worrel, Unpriced Values: Decision Without Market Prices. xiv Franco Archibugi The ‘Programming Approach’ and the Demise…

–– idem, for quotations of A. Faludi, Critical Rationalism and Planning Methodology –– The Cambridge University Press, for quotations from M. Blaug, Methodology of Economics –– idem, for quot. from D.E. Bell, H. Raiffa, A. Tversky, Decision making –– idem, for quotations from Acocella, Di Bartolomeo, Hughes Hallett, The Theory of Economic Policy in a Strategic Context. –– idem, for quotations from Nicola Acocella, Rediscovering Economic Policy as a Discipline. (2018) –– The MIT Press, for quotations from W. Isard’s book.General Theory. –– Hachette Book Group, publ. for quot. From D. Bell and I. Kristol, The Crisis in Economic Theory –– Ediesse pub. for quot. of B. de Finetti, Un Matematico tra Utopia e Riformismo –– Liberty Fund, publ. for quot. of L. von Mises, The Ultimate Foundations of Economic Science –– The New Press publ. for quot. of I. Wallerstein, The Essential Wallerstein

Rome, Italy Franco Archibugi

Notes to the Preface to the Three Volumes of the Trilogy, the Acknowledgement and the Dedications

1. For further information about the life of the Planning Studies Centre of Rome, see the Website (www.planningstudies.org) and my personal site at (www.francoarchibugi.it). I have to inform here that the last scientific management Council of the Centre had decided last year, to stop any further activity of the Centre, at the end of the year 2018 (except by some completion of researches, writings Franco Archibugi Preface to the Three Volumes of the Trilogy xv

and papers, to be completed on Planology, and studykeeping texts and documents in the International Network, still considered of some interest). The same Council decided also to donate The Library of the Centre, which has become in the last fifty years of life, a rare and precious instrument of documentations, on an area matter that many people begin to name Planology, or Programming area of study, available at one of the most Faculties of Economics of the University of Rome (specifically the Faculty of Economics of the University of Rome II (Tor Vergata), more equipped in espace than others; and where it has been accepted with much interest, satisfaction, and a special attention to keeping the value oriented to the planological structure of its originary distribution, and taxonomic classification). 2. Among the first statutoryfounders (in the form of the Italian ‘Onlus’, and worldly ‘Ngo’) were friends even had a long life with many people which managed it, with much continuity for somebody and less continuity for some others. Some of them have been—non more living but nevertheless deserve to be remembered: –– Ruggero Amaduzzi, Luigi Bruni, Vincenzo Cabianca, Vera Cao-Pinna, Alberto Caracciolo, Giorgio Fuà, Alberto Lacava, Siro Lombardini, Pietro Merli-Brandini, Manfredi Nicoletti, Giuseppe Orlando, Camillo Righi, Luigi Spaventa, Paolo Sylos Labini, Mario D’Eramo, Giuliano Bianchi. To all them I send my grateful thought to their help to the Centre and to me. –– But they deserve to be also recalled other people younger still living, that have given an important contribution to the Centre. Like: Gemma Arpaia, Enzo Bartocci, Roberto Bisogno, Nicola Cacace, Caterina Capriati, Luciana Carcassi, Roberto Cassetti, Annalisa Cicerchia, Maurizio Di Palma, Bruno Ferrara, Maurizio Garano, Franco Karrer, Giuseppe Las Casas, Martino Lo Cascio, Claudio Mazziotta, Luigi Mazzillo, Massimo Pazienti, Antonio Saturnino, Nazareno Tomassini, Umberto Triulzi. 3. A fortunate opportunity for contact with them was at the first World Congress of the ‘Econometric Society’ promoted in Rome in the 1965, at which I have been invited by the Committee of the Society, to the role of the General Secretary, for purely organizational role merits, as director and founder of the Planning Studies Centre (just instituted), which has been committed by the organs of the first [World] Econometric Society, (at that time domiciled at Harward University) to take care of the organisation of the Congress. This allowed me to come into valuable contact xvi Franco Archibugi The ‘Programming Approach’ and the Demise…

with a number of economists working since a long time in the same direction of our Centre and of my own research, and with whom I established enduring relationships on which I based and matured the vision of which this book is an expression. These relationships are briefly noted in the Appendix 1. (Vol. I of the Trilogy.). A significant selection of which is listed both on my website (www.francoarchibugi.it) and on that of the Planning Studies Centre (www.planningstudies.org). 4. My personal fellowship with Federico Caffè, at the origin of our own professional training, and at the origins of our professional commitment for the reconstruction of the country—immediately after the end of the II World War (1945): I as a very young (19 year old), officer of the Ministry of Reconstruction, of which Caffè (31 year old) was ‘chef-of- the-staff ’ of the Minister; working together for the same direct effective policy, the economic policy of the Governments. Since this starting point we have worked long a life, on the same issues, together: Caffè, only like university teacher, preparing people to manage themselves as to be decision-makers, oriented to be based on the ‘economic programming’ for different Government experience approaching performances; and me, to be a good instructor and consultant for any needs of customary public institutions through the ‘Planning studies Centre’; in Italy: Ministries and Regional Authorities, and, for several European institutions, CECA, CEE, and EU Presidency, Conseil of Europe, OEEC. and United Nations, like UNDP, UNECE, FAO UNIDO, UNESCO, and their involved countries, in economic Policies and Programming projects. In the beginning, having transformed in Italy the Ministry of Reconstruction in a ‘Committee Interministerial for the Reconstruction’ (CIP), (1947– 1951) we continued on the same job argument (Reconstruction) facing the years of the American the European Recovery Program (ERP), called ‘Marshall Plan’ (OECE) increasing our common basic competence. Thus, I have been also gratified from his wise learning in the economics of public affairs, well engaged in the same job. Since the beginning of our friendly cooperation to that of academic maturity, our dialogue was hinged on the relationship between philosophy (My first choice for the University study has been—essentially humanistic) and economic theory. My university years have been essentially spent in course of History and Philosophy—(see my biographical news in Internet). However to maintain me to the studies, I have been obliged to take a job in some Public Administrations immediately after the war, gaining responsibilities in the Italian Agencies occupied (in Rome and half in Paris) with management Franco Archibugi Preface to the Three Volumes of the Trilogy xvii

and implementation of and other public policies. My job in Rome was at a Ministry for the Ricostruzione, 1944–45, (and later in the Interministerial Committee for the Recovery Policy, CIPE), were I met Federico Caffè, chief of Cabinet of the Minister Meuccio Ruini before becoming one of the best teacher of economic policy, in the Rome University. Any case I owe this Trilogy very much to Caffè, to his unceasing and tenacious encouragement. So I missed the opportunity to publish this Trilogy before a certain scientific meeting agreed upon with him, as a deadline for my work. This contributed to delay even more the conclusion of my work, giving me time to follow other engagements and dead- lines, unfortunately much more ephemeral than the effort towards the scholars of which I was wishing a revival. This work still feels the affect of that dialogue with my old friend, not always in unison but always rich and fertile with reflection. 5. A significant selection of this works is indicated in my Internet site (www.francoarchibugi.it) or of the Planning Studies Centre (www.planningstudies.org). 6. This simple choice had radical consequences in my private life, inducing me to neglect in the first stage, the university ‘teaching’ and to dedicate myself first in an activity ofdirect consultancy for public agencies, really engaged in planning processes, mainly within the Italian Government and Regional authorities, but also some within international programs of the United Nations Organisation, and its family of Agencies, UNDP, regional and sectorial bodies, European Community and Union, OECD. Only later I have been convinced to share my first engagement in a university teaching experience in the new university campus of University of Calabria, who would was represent in Italy a deep reform of the current university life, after several experiences in several foreign university stages. All this steralized a significant part of my time in engagement of managerial type, which had little to do with the research experienced in itself, but always better than feeding an only academic dissent, with colleague economists without direct experience of programming, without deepening of necessary data; colleagues which I saw and see always starting—even in their preeminent journalistic performance of ‘columnists’ and in public administration, in newspapers and in other mass-media—to navigate often with useless ballast with much disinfor- mation on the conditions, culture and definite conditions of which they are the bringers, as I will try to sustain better in the course of this Trilogy. xviii Franco Archibugi The ‘Programming Approach’ and the Demise…

7. I am referring to, for first, Myrdal’s book on ‘The Political element in the evolution of economic theory’ (1932). Translated from Swedish into German in 1933, (from the German into Italian in 1943!) and later translated in first time with many adjustments into English (!) only in 1953 (see ref. Bibl.). This juvenile book by Myrdal was the absolute first that I read (at teenage) in the subject of economy, while I was concen- trated on my severe historical and philosophical studies. It was a book that, in its vast prospective of analysis of the historical thought of economists, always represented for me a ‘critique’ guide of economic theory and indelible imprint on my future experience about economic thinking. For this reason I must dedicate to him the first place in the dedications that I feel I must give to many scholars that left a trace on my reflections expressed in this work. 8. That which is expressed from his political responsibilities, from his academic technicians represented from time to time by his specialized com- mentators in the mass media. For further analysis of the problems of the relationship between politics and economic ‘science’ and actions of governments to whom this Trilogy is dedicated, I recommend the reading of my works, soon to be translated in English: Introduzione alla pianificazione strategica in ambito pubblico (Alinea, Florence 2004); (Introduction to Strategic Planning in a public setting), and Compendio di programmazione strategica per le amministrazioni pubbliche (Alinea, Firenze 2005); (Compendium of Strategic Programming for public administrations), a theoretical support for this work would be in the book ‘Teoria della pianificazione: dalla critica politologica alla ricostruzione metodologica’ (published in Italian by Alinea. 2003, and also in English by Springer in 2007). 9. About how to build this ‘frame’ of reference for the process of political choices, already from the Ragnar Frisch work, and about how to use it in order to rationalize and render effective the choices and political decisions at national levels, is just the intention of this Trilogy. 10. Two of my published books (only in Italian at the moment) have already been remembered in Note 9, testify of this effort. 11. The way to construct such a ‘framework’ of referral—already intuited and discussed in the work of Ragnar Frisch—and the way to use it to rationalize and make efficient the choices and political decisions, on a national scale. My book does just this, in particular, Chaps. 7 and 8, of Vol. II, and Chaps. 1–4 of Vol. III. Franco Archibugi Preface to the Three Volumes of the Trilogy xix

12. See also in English, The Associative Economy, by Franco Archibugi’s (Macmillan, 2000) quoted above, pg 252–253. 13. About the way to build such framework of reference—already intuited and discussed in the work of Ragnar Frisch—and about the way to use it in order to rationalize and render it efficient for the choices the policies at national scale, is the task of this Trilogy, in particular, its Chaps. 7 and 8 of Vol. I, Chapters from 1 to 4 of Vol. II, and the Chapters from 1 to 4 of Vol. III. I think that very meaningful signals indicate that we are at a good turn of application of the ‘Programming approach’, at least at the scale of the public expenditure. I refer to the current experiences, begun in the United States of America with the general introduction of the strategic planning at the federal Government (with the Government Performance and Result Act (1993), followed by some similar but not so explicit initiatives in Great Britain (the procedure connected with the ‘Comprehensive Spending Review’ (since 1998) and in France (with the regime LOLF: Loi organique des lois financiers, in full evolution from 2001). Now both dissolved. I hope these operational realities (often called ‘Reinventing government’ in USA or New Public Management-NPM in the ‘Commonwealth countries’) will soon apply in every country and at an international level, as well as a ‘culture’ of the public governance inspired by the ‘Programming approach’). (See Biblio. References to the Part II Vol. 2; of this Trilogy, and: of other writings of F. Archibugi 2004, 2005, 2007, 2008, already cited in the Note 9.) In the Appendices of the Vol. II of the Trilogy, there are reported some documents concerning two major initiatives—of the Italian Centre, during the course of its life): One prioritaire information that I owe

–– Appendix 1 of Vol. III the trial of concluding a methodological implementation in Italy, commitment of Italian Government, in the years 1971–1973 of two initiatives: Planning Accounting Framework (PAF), under the lines developed by Ragnar Frisch and, and exposed in the course especially in the Chapters of the Vol. III of this Trilogy. This trial was called “Progetto Quadro” (‘Framework’ Project) and under the direction by the Prof. Maurizio Di Palma, co-director of the Centre, has involved a good deal of Italian colleagues an external experts in planning till to a Report for the build- xx Franco Archibugi The ‘Programming Approach’ and the Demise…

ing of a ‘Planning Accounting Framework’ (PAF) for the Italian Government (of difficult published, tracing, in Italian official agencies of Public Administration); see Appendix 2. Vol. III. –– Appendix 2 of Vol. III the promotion and organization of an international Meeting the theme of the possibility to give raise to an international conference on a methodological and unitary scientific cooperation on planning science, with the sponsorship of the (Italian) National Research Council (CNR): with also participation of experts of UNESCO, the United Nations University, European University Institute of Florence, and 37 invited scholars of different disciplines presenting each a paper. In the Meeting supported also from the Region Sicily. In such conference was also proposed to create an International Academy for the Advancement of a Planning Science, of which Prof. Jan Tinbergen and Wassily Leontief accepted to be Honorary Chairman. The proposal did not meet no more the promised financial support of the CNR, because of the changed political orien- tation of Italian government (In the same Appendix 2. Vol. III, a short information about the initiative, the participants and few documents prepared for it).

Bibliographic References for the Preface

Archibugi, Franco. (2000). The Associative Economy: Insights Beyond the Welfare State and into Post-Capitalism. London/New York: Macmillan. Archibugi, Franco. (2003). Teoria della pianificazione: dalla critica politologica alla ricostruzione metodologica. Firenze: Alinea editrice. Archibugi, Franco. (2005). Introduzione alla pianificazione strategica in ambito pubblico. Firenze: Alinea editrice. Archibugi, Franco. (2005). Compendio di programmazione strategica in ambito pubblico. Firenze: Alinea editrice. Contents

1 How Scientific Are the Social Sciences? 1 1.1 The Starting Point of the Reasoning 1 1.2 The Roots of the Deterministic Error 2 1.3 The Anti-Positivist, but Misleading, Contribution of Ludwig von Mises to the ‘Praxeological’ Approach 4 1.4 The Scientific Impasse of the Missed Praxeological Approach 6 1.5 Myrdal’s Comparison Between the Natural and Social Sciences 8 1.6 Unresolved Implications of the Differences Between Approaches 14 1.7 Incorrect Emulation of the Natural Sciences 16 1.8 The ‘Explicit-Making’ of Values 19 1.9 The ‘Scientificity’ in Social Sciences 21 1.10 Myrdal as Founder of the Planning Approach, and his Wide Horizon 23 1.11 The Personal Involvement of Myrdal in the Issue of the ‘Scientificity’ of Political Economy 23 1.12 How much Scientific, the Social Sciences? 26 1.13 Myrdal’s Personal Involvement in his own ‘Scientificity Case’ 27 Bibliographical References to Chapter 1 (Vol. I) 39 xxi xxii Franco Archibugi The ‘Programming Approach’ and the Demise…

2 Towards New Scientific Paradigms for the Social Sciences (According to Myrdal) 41 2.1 Theories and Facts 41 2.2 The Inherent ‘Transversality’ in the Social Sciences 45 2.3 The ‘Crucial Logical Point’ for any Science 47 2.4 A ‘Re-direction’ in ‘Economic Science’? (Myrdal’s Last Message) 53 2.5 Obsolete Disciplinarity and the New Role of the ‘Economist’ 56 2.6 From Interdisciplinarity to Transdisciplinarity: The ‘Problem Areas’ 58 2.7 Beyond Myrdal 59 2.8 Beyond the ‘Positivismusstreit’ in Twentieth-Century German Sociology 64 2.8.1 The Vienna Circle and the Epistemological Overturning 65 2.8.2 Karl Mannheim and the ‘Sociology of Knowledge’ 65 2.8.3 The Frankfurt School Versus Karl Popper 67 2.9 The Return to a Clear and Simple Socio-Economic ‘Pragmatism’ 70 Bibliographical References to Chapter 2 (Vol. I) 81

3 Planning and Planning Theory: The Difficult Legacy of Ragnar Frisch 83 3.1 Econometrics and Planning 83 3.1.1 The Oblivion of Frisch’s ‘Economic Planning Studies’ 83 3.1.2 Econometrics or ‘Playometrics’? 86 3.1.3 Econometric Analysis as a Function of Planning 90 3.1.4 Frisch’s Internal Critic of Western Planning Systems 92 3.2 A ‘Return’ to Frisch? 94 3.3 A General Ethical Vision Within Which to Frame Frisch’s Legacy 97 Franco Archibugi General Index of the Whole Work xxiii

3.3.1 A Better Economic System Against the ‘Egoistic Ghost’ of Human Nature 97 3.3.2 How to Dissolve the ‘Ghost’ of Human Egoism? 100 3.3.3 A Seafaring Metaphor for Planning 104 3.4 A Diriment Edge: Decisional Modelling 106 3.5 A Short Excursus on Frischian Scientific and Ethical Philosophy 108 3.5.1 The Lure of ‘Unsolvable Problems’ 109 3.5.2 Research on the ‘Ultimate Reality’ and the Philosophy of Chaos 111 3.6 Universal Humanitarian Ethics 116 3.7 A Useful Historical-Schematic Reconstruction of Economics (According to Frisch) 120 3.8 Quantification of Concepts and Reality Modelling 123 3.9 The Critical Contribution of Wassily Leontief 127 3.10 Towards Another of Frisch’s Implicit ‘Breakthroughs’: The ‘Demise’ of Economics? 129 3.11 The Course of This Book 130 Bibliographical References of Chapter 3 (Vol. I) 152

4 Basic Requirements for the Programming Approach 155 4.1 The Basic Logical Setting 155 4.2 The Proper and Improper Use of the Term ‘Planning’ 156 4.3 Policy Decisions and Technical Analysis 158 4.4 Thinking in Real Terms Rather Than in Monetary Terms 160 4.5 The ‘Operational’ Character of Planning 161 4.6 The Question of the ‘Objectives’ and the ‘Strategic’ Nature of Planning 162 4.7 The ‘Optimal Plan Framework’ Approach to Planning 163 4.8 Three Planning Stages and Other Connected Questions 164 4.8.1 Further Considerations About the Distinction Between ‘Selection Problems’ and ‘Implementation Problems’ 166 4.8.2 The Plan ‘Structuring’ as a Preliminary Stage of the Planning Process 168 xxiv Franco Archibugi The ‘Programming Approach’ and the Demise…

4.8.3 Conflict Among Objectives 169 4.8.4 The Quanti-qualitative Assessment Question 170 4.9 Other Requisites for a Correct Approach to Planning 171 4.9.1 The Essential Acknowledgement of the Human Factor 171 4.9.2 The Pareto Optimality 172 4.10 The Various Phases of the Planning Work 174 Bibliographical References to Chapter 4 (Vol. I) 181

5 The ‘Programming Approach’ 183 5.1 Principal Characters of Frisch’s ‘Programming Approach’ 183 5.2 The Programming Approach Implications 186 5.3 The Limitations of the Programming Approach 187 5.4 The Programming Approach in Respect to the Other ‘Pre-programming’ Approaches of Planning 189 5.4.1 The Savings Rate of Growth Question 189 5.4.2 The ‘Rate of Growth’ Question (GNP) 190 5.4.3 The Question of Balanced Growth 192 5.5 The Accounting Instrument to Implement a Programming Approach 193 5.6 The Steps Towards a ‘True’ Programming Approach 194 5.6.1 The Ad Hoc Instrument Approach 196 5.6.2 The Feasible Instrument Approach 197 5.7 The ‘Half-logic’ Inconsistencies 198 5.8 The Optimalization Approach 202 5.9 The Political Preference Function and Its Instruments 202 Bibliographical References to Chapter 5 (Vol. I) 206

6 The Political Preference Function 207 6.1 A New Season of Cooperation Between Politicians and Econometricians 207 6.2 The Institutional and Political Aspects of the Political Preference Function 209 Franco Archibugi General Index of the Whole Work xxv

6.3 Some Disagreement Over the Issue of the Formulation of Political Preference Function 211 6.3.1 The Approach of Separation Between the ‘Selection’ Phase and the ‘Implementation’ Phase (According to Frisch) 211 6.3.2 The Fixed Target Approach (According to Tinbergen) 213 6.3.3 Multiple Preference Systems? 213 6.4 Some Procedural Aspects 217 6.5 The Construction of the Political Preference Function 218 6.6 The Formalization of the Political Preference 224 6.7 Further Steps in Our Analysis 226 Bibliographical References to Chapter 6 (Vol. I) 234

7 The Impact of the Programming Approach on Socio- Economic Modelling 235 7.1 The Quantitative Modelling of Phenomena 235 7.2 The Impact of the Programming Approach on Modelling 236 7.2.1 The Importance of ‘Decisional Parameters’ 237 7.2.2 From Typological Catalogue of the Descriptive Models to the Political Preference Formalization 241 7.3 Some Further Technical Considerations on the Selection (Decisional) Models 246 7.3.1 The Disaggregation of Phenomena and the Pyramidation Problem 246 7.3.2 The Sub-division Problem of Plans 248 7.3.3 The Multilevel Plans Coordination Criteria and the Pyramidation Problem in Decisional Structure 249 7.3.4 Further Examination of the Pyramidation Problem 250 7.3.5 The Dynamic of Planning and of Timing Coordination 252 7.3.6 The Linearity or Non-linearity in Selection Models 254 7.3.7 The Choice of Variables in the Selection Process 255 7.3.8 The Structure of the Economy and the Formulation of the Political Preference in Decision Models 256 xxvi Franco Archibugi The ‘Programming Approach’ and the Demise…

7.4 ‘Deterministic Relations’ and ‘Deterministic Bounds’ as Mathematical Instruments 259 7.4.1 The Stochastic Viewpoint 260 7.4.2 Definitional Relations 261 7.4.3 Technical Relations 261 7.4.4 Behavioural Relations 263 7.5 Political Equations and the Constraints 264 7.5.1 ‘Definitional’ Constraints 265 7.5.2 ‘Capacity’ Constraints 266 7.5.3 ‘External’ Constraints 267 7.5.4 ‘Formalisation’ Constraints 268 7.5.5 ‘Bluntness’ Constraints 268 7.5.6 Political and Humanitarian Constraints (Part of the Preferences) 269 7.6 Other Technical–Mathematical Issues for the Use of the Preference Function in the Decisional Model 272 7.7 Using Mathematical Method as an Instrument for ‘Problem-solving’ (During Selection Stage and Any Kind of Collective Bargaining at National or Supra-national or Global Scale) 275 7.8 Leif Johansen’s Contribution to Decisional Model Theorizing 276 7.9 Some Conclusions 282 7.10 An Opportune Re-definition of the Methodology in Planning Models (According to Leif Johansen) 284 Bibliographical References to Chapter 7 (Vol. I) 292

8 The methodology of the ‘Central Planning’ for the implementation of the ‘Programming Approach’ (The great role of Jan Tinbergen) 293 8.1 Approach at Government Level 293 8.2 The Economic Planning as Central Part of the Economics 296 Franco Archibugi General Index of the Whole Work xxvii

8.2.1 Planning as a Natural Approach of the Economic Vision of the Social Welfare 296 8.2.2 Actors and Their Tasks in Planning 298 8.2.3 Activities in Each of the Phases 300 8.2.4 Procedures 304 8.2.5 Planning Timetable 308 8.2.6 Organisation 310 8.3 Methodology and Modelling 313 8.4 Tinbergen, Frisch and the Leontief ‘input-output’ 316 8.5 Further Remarks on the Relations of the General Economic Process 318 8.5.1 From Unplanned to Planned Policy 318 8.5.2 About the Contents of Plans 320 8.5.3 Some Interesting Comments on a Theoretical Analysis of the Influence of Planning by( Jan Tinbergen) 322 8.6 A Different Way by Tinbergen to Conceive ‘Optimal Planning’ 325 8.6.1 ‘Optimal Planning’ 325 8.6.2 The Optimum Regime: Choices to Be Made 327 8.6.3 Criteria for Optimum Planning 333 8.7 Some Remarks on Optimum Methods: What Must Be Planned? 334 8.7.1 Some Remarks on Optimum Methods: Planning in Stages? 336 8.7.2 Some Remarks on Optimum Procedures 338 8.8 The RIO Project, 1978, for the Reshaping the International Order 341 8.9 Other Efforts to Suggest Same Global Measurements on National Programmes 343 8.10 Philosofic and Historical Images of World Development 345 8.11 An Evaluation of the State Advancement of Scientific and Technical Steps, After the RIO Project (The Globus Model Methodology) 346 Bibliographical References to Chapter 8 (Vol. I) 351 xxviii Franco Archibugi The ‘Programming Approach’ and the Demise…

9 The Pitfalls of Implicit Theorising and the Abuse of Indirect Statistical Inference: Leontief’s Criticism 355 9.1 From Myrdal and Frisch’s Epistemology to the Leontiefian Internal Criticism of Economic Theory 355 9.2 The Neglected Contribution by Leontief to the Criticism of Implicit Economic Theorising 357 9.2.1 The Fallible Logic of Implicit Theorising 358 9.2.2 Implicit Solutions Versus Explicit Solutions: The Mistake of the Method of Implicit Solutions 360 9.2.3 The Historical References of Leontief’s Criticism (Robinson, Kahn, Hicks, Keynes and Others) 364 9.3 A Permanent Frame of Empirical Observations Ex Ante as Basis for the Reliability of Theoretical Postulates 366 9.3.1 The ‘Implicit Theorizing’, the ‘Half-Logic’ and the Programming Approach 367 9.3.2 Benefits and Risks About Mathematics in the Progress of Economics 369 9.4 The Abuse of Statistical Indirect Inference, Second Part of Leontief’s Criticism 371 9.5 The Poor Outcome of Economic TheorisingAccording ( to Leontief ) 372 9.5.1 The ‘Futile Use’ of Modelling 373 9.5.2 Academic Responsibilities in Self-Referencing Approach and in Its Practice 375 9.6 For the Research of an Analytical System and a Steady Flow of New Data, Capable of Including the Entire Range of Programming Perspective Flows 377 9.6.1 The Meta-economic or ‘Unified’ Approach 377 9.6.2 From Casual Empiricism to the Analytic System 379 9.6.3 Towards Classification Systems of Uniform Coordination 381 9.7 Planning and Policy-Centred System Analysis and the ‘Planning Account Framework’ (PAF) (in the Leontief Vision) 382 Bibliographical References to Chapter 9 (Vol. I) 389 Franco Archibugi General Index of the Whole Work xxix

Appendix to Vol. I 391

Bibliography 417

General Index of the Kee-Concepts Volume I 431 General Introduction on the ‘Programming Approach’ to the Whole Trilogy

for a radical worldwide ‘redirection’ of development and income policies

1 Sense and Significance of this Work

This work, The Programming Approach and the Demise of Economics, which has engaged the last 20 years of my life as an economist, and which has even more distant personal origins, is a work that attempts to respond to two questions that in today’s world seem to become ever more frequent and pressing:

Is ‘economic theory’ (economics), as we know it, on an universal scale and in theory and practice capable of providing appropriate and effective instruments for political decision-makers (governments or parliaments), especially as these political decision-makers have urgent needs in managing the recurrent threats of economic collapses or crises? In more general terms, is economic theory itself sufficiently advanced, or in more direct terms useful enough, to help the political decision-makers get results in conformity with their announced, mature or preferred programmes?

The answers to these simple questions are not as easy as the questions themselves. xxxi xxxii Franco Archibugi The ‘Programming Approach’ and the Demise…

This work, divided into three volumes, aims to provide an answer to these questions, both directly (Vols. I and III) and by criticising different incom- plete ‘theories’ that are based on a mainstream positivist approach (Vol. II). The most reflexive part of public opinion would understand that a straightforward yes or no answer would be unconsidered and not very accurate.1 The purpose of this General Introduction is to place theprogramming approach (PA),2 further explained elsewhere below, into historical context and into the story of economics, from its first modern mentions by those authors who were called later ‘classical’ (dating from the Enlightenment of the eighteenth century) and in the context of the great changes then occur- ring, with events related to the so-called Industrial Revolution and to the cultural overturning of civil and democratic rights in the more important European countries.3

2 The Origins of the Traditional ‘Political Economy’

Since the first debate was introduced by eighteenth-century authors who wrote on economic matters, the old juridical order (or the so-called ancien régime) has been declining. For centuries, and in various forms, there was one common principle: that the legitimacy of the political and juridical power exercised on many peoples, and in many civilisations, in any corner of the world, resided in God’s will. As we will note below, the rise and development of human ‘science’, with economics as an example, has had strict connections with the demise of political legitimism, first promoted by the Enlightenment thinkers, who were opposed to the legitimacy principle,4 with greater or less emphasis.5 The belief in this legitimacy progressively came to fail, this failure affecting economics as a discipline or ‘human science’. France was the epicentre of this upheaval, but it diffused throughout all European nations. The origin of this upheaval was related to the demise of the principle I mentioned above, the principle of legitimacy, that was coined as the ancien régime began to collapse, after the Congress of Vienna of 1815 to 1816).6 Franco Archibugi General Introduction to the Whole Trilogy… xxxiii

I will refer to the most relevant economists, mainly of France and Great Britain, such as François Quesnay (1694–1774) and Adam Smith (1723–1790) together with some of their predecessors or successors, and some others more or less involved in the Enlightenment. I will try to show the multiple ambiguities of their thought, which created an economics unclear in its main aims.7

2.1 The Evolution of the ‘Tiers Etat’ and the Demise of the ‘Ancien Régime’

These economists (that today we call ‘classical’), were not lacking in divergence when it came to what should have been the basic aim of the supposed new ‘science of economics’. Their aim could be essentially cognitive, like a detailed and in- depth study or a purely scientific study, with the imprint of ‘natural law’, which was common to all the research and achievements in the field of natural sciences, that had developed between the sixteenth century and the eighteenth century.8 Alternatively, it could be a practical discipline intended to help to save time and gain easier answers to the practical objectives that they gave themselves.

The cultural and philosophical base of the eighteenth century was decidedly naturalistic. This was common to all research and achievements in the field of natural sciences.9 However, in all fields during the seventeenth century, there was a more intense manifestation of this, the aim of which was to help the actions and practical skills of nations and their rulers and—at the same time— allow turbulent nobility to claim autonomy. From the seventeenth century, populations widened the quantity and quality of trades and the arts, from skills in agricultural techniques and livestock to the spread of ‘artisan’ trades, the arts (music, painting, sculp- ture and architecture, as well as theatre and literature) for the pleasure and service of nobility, medical knowledge (health, and disease) and to charitable and social organisations. Activities were increasingly detached from the residential areas of fief- doms, and increasingly became closer and were tied to more practical trading locations, such as markets, preferring areas that were more suitable for enhanced communications, and broadening access for the labour market. xxxiv Franco Archibugi The ‘Programming Approach’ and the Demise…

All this happened through the prevailing development of urban settle- ments and agglomerations, which were more favourable to those exchanges of goods and the division and specialisation of human labour, which was increasingly conceived as the primary factor in both technical and economic progress. The division and specialisation of labour also extended to activities that had previously been considered to be governmental functions, such as management and public protection of rights, administration of justice and order, and military defence (if we want to legitimise it).

2.2 The Formation of the New Class, the ‘Bourgeoisie’, and the Role of the Classical and Neo-classical Economy

These divisions and specialisations of labour, which came from the original legitimism, remained pertinent to the aristocracy for a long time, determining a hybrid and ambiguous relationship between the aristocracy, to whom the concept of legitimism assigned the use, the power and the right to use the public capital and goods (essentially cultivable and exploitable land), and the capital and labour that they managed—those people not belonging to the aristocracy—for the benefit of everybody: workers, managers and landlords; the lower and upper classes alike. At the time of the Enlightenment, people began to live in portions of territory that did not belong to the aristocracy, who were the lords of each territory, or to the clergy, which had evident connections to the aristo- cratic families. The great agglomeration of people, in spite being politically united, began to break into categories of specialisation, in which members were more inclined to develop their own labour or make their own careers, thereby generating the growth of different genres of activities, which affected the welfare and economy of the entire state. In France, the so-called ‘Third Estate’ included all kinds of people living in this determined territory (workers, artisans, professionals and military officers). They began to consult with their representatives and to vote in public assemblies, counselling the king and becoming de facto managers of the state’s economy, as servants of the monarchy and other Franco Archibugi General Introduction to the Whole Trilogy… xxxv levels of the aristocracy, but without the right of property because of the rigid hierarchy that continued to pertain. These changes benefited the indolent aristocracy, who became ever more wasteful and parasitic, and indifferent to the performance of the workers, who became increasingly exploited. Private property was protected by its institutions, such as corporations, banks and stock exchanges, which created a certain order. It was through assemblies that were selected on the basis of political number and power that substituted a new constitutional system for the formal and ancient legitimistic system. This transformation was based on the formation of new property rights, through which full exercise of private ownership became possible. Thus, economics consolidated, after its original ideology of an ambiguous political liberalism an economic liberalism that began with a new private structure of economic property and power and subtracting (with the mythology and philosophy of laissez-faire) to the public competence, and to the economic policies of public institutions, the role, methods and procedures that were implicit in the ‘revolutionary’ democratic values of the eighteenth century, responding in some way to egalitarian principles. An idea of liberty was disassociated from that of equality, as the concept of solidarity and cooperation between all people was replaced by an extreme defence of individualistic freedom for the minority privileged ‘bourgeoisie’. This forgot the implementation of the equality principle but instead moved towards inegalitarian principles based on different origins. From this came the formation of a new middle class (the bourgeoisie), arising from the collapse of the powers of past nobility and the legitimated classes of the ancien régime, that tried to replace the old aristocracy through progressive takeover of its own estate. However, before this occurred new European nations were created by the democratic revolution (though this was partial) and the demolition of the ancien régime by formal and constitutional national and democratic institutions, absorbing public law (created by centuries of the ancient feudal system) into a new private law. Public riches were appropriated by the aristocracy, as it metamor- phosed into the new bourgeoisie. xxxvi Franco Archibugi The ‘Programming Approach’ and the Demise…

The predominant aim of this was to increase knowledge of human economic relations, or public and private affairs. These, with their iden- tifying modalities and principles, had been useful to everybody at every level of society (at this time, class distinctions were not defined by social conditions but by natural law, called ‘legitimism’). Entering the nineteenth century, economics carried out the function of a ‘science of being’, in terms of the natural sciences.10 And this has been the case for the 300 years of its existence. So far we have just considered the early economists, still not profes- sionally defined, at a time when economic thinking was still called political economy. Only later, as the nineteenth century went on, did they appear to be no longer related to activities and engagements in the noble world, but to new emergent classes such as moral or political philosophers, artists, mathematicians, physicists, and often physicians, being received into scientific and academic bodies. In previous centuries, many important discoveries were achieved in the so-called natural sciences. This greatly influenced the more important courts of Europe (from Louis XIV to Louis XVI, the Viennese imperial court, the Habsburgs, the court of Berlin of Frederick II and other minor courts, in Italy, Spain and Scandinavia), so much so as to contribute to strengthening relations between the rising nations and also the ideas of the Enlightenment. When the traditional world of agricul- ture and commerce began to disintegrate and new directions in industrial and commercial production appeared, the most important European courts began to compete in promoting study and thought, taking the more notable people or promoting those of their own country or their own language. This very much influenced authors who were writing about economic issues, and there was an increase in naturalistic and positivistic methods of approach in the new ‘science’ of economics, as it imitated the method- ologies of the natural sciences.11 Thus was launched the profession of economist—which is at the root of modern political economy: those chair-holders or ‘theoretical’ profes- sors in universities, places of retreat for technical training but also for ethics.12 Franco Archibugi General Introduction to the Whole Trilogy… xxxvii

Economics is therefore about programmes and actions decided without adequate historical analysis of their feasibility or of their effects, not only in respect of expectations, but also their capacity to be implemented.13

3 The ‘Democratic Revolution’: A Historical Break in the History of Mankind and Its Restoration Period in the Nineteenth Century

This historical reflection on economic science (here developed in three volumes) tries to give an answer to the initial questions describing and deepening the nature and modalities of the PA as a way of providing a systematic illustration of the change of paradigms that, in the current state of socio political, economic, technical, and managerial research, is acknowledged to be necessary. This change should be expressed as a way of conceiving, and of practis- ing, the relationship between economists, in their role of analysts, and politicians, in their role of decision-makers. Only through this new system of relations between politicians and analysts, prepared for their respective roles, but commonly coordinated, can it be possible to implement, with a greater probability of success, the positive and satisfying ‘common good’ (not only with an economic imprint), which is much talked about, but has still not been defined by any political authority on an appropriate scale. From this historical reflection comes also a suspicion, which should be not so important to deepen or change, about the paradigms of economics. It would probably be sufficient that such paradigms (assessed as good or bad, as truth or misleading, according to various schools) would be rethought, perhaps updated and again applied using different approaches. Perhaps, using the PA, already so-called by some economists of the last decades of the nineteenth century, including Scandinavians such as Gunnar Myrdal, Ragnar Frisch and Leif Johansen, and also Jan Tinbergen (Dutch), and Wassily Leontief (Russian-American), as indicated below, allowed them to be considered free and independent from the repetitive influence of mainstream economists. xxxviii Franco Archibugi The ‘Programming Approach’ and the Demise…

However, the suspicion arises that it is not so important to deepen or to change the so called paradigms of economics. Perhaps it would be sufficient to think that such paradigms, assessed as good or bad, correct or incorrect, true or misleading, should not be denied or refused, but only rethought and perhaps updated, and applied to a different approach; an approach that has been called and defined by some clever economists of the last decades of the past century, the PA.14 The case of institutional economics, an important stream of economic thought, ever on the critical forefront with respect to mainstream economics, will be taken into consideration in an additional note. Those economists (Gunnar Myrdal, Ragnar Frisch, Jan Tinbergen, Leif Johansen and Wassily Leontief, and some others) will only be remembered and revived in this trilogy, a few decades after their death, through abundant quotations from their writings. These authors did not find it easy to be published in their lifetimes, for a variety of reasons that will be mentioned and discussed. Especially in the case of Ragnar Frisch), the author assumes full responsibility for the reordering of material. This has been done to facilitate presentation of material that was previously very muddled It is not possible to relaunch the writings of some authors, and not ask why these writings did not affect in a positive way the new economic literature, which has created dissatisfaction and intolerance, as well as declared feelings of impotence in respect to recurrent and proved failure of application of previous ‘economics’ in terms of the reality of events. A new and important economic literature has been produced that has remained connected in some way to the traditional positivist approach, but without a deeper understanding of the implications of the new approach—which was, naturally, incompatible with the old one. At this crossroads, there were many other economists or quasi- economists from diverse cultural environments and with different political and social motivations who were all nearing a decision-making world that needed to believe in the possibility of operating efficiently, and fur- thermore needed to reflect systemic solutions of a higher level and value. Franco Archibugi General Introduction to the Whole Trilogy… xxxix

Therefore, I thought of bringing into this trilogy a look at the decision- making field (for me the most representative and operational field of the decision-making approach) and its more significant authors, making the reasons for the PA more explicit. This extension of the panorama has been included in Vol. II (with a chapter for each specific decision- making field). Perhaps this occurred because, in their theoretical and scientific choice, the inherited scientific bases were not ‘theorised’ in a sufficiently suitable way to reality to which they should have been applied. Maybe it is necessary to correct them with other constraints or thoughts that come, not from economics, but from other disciplines or social sciences, as Gunnar Myrdal stated, when he preached problem-solving, ‘there do not exist, in the field of human sciences (‘economic’, ‘social’, ‘ethical’, ‘political’, ‘psychological’ or ‘environmental’ problems etc.) but only problems and any other approach risks being completely useless and wrong, closed in its own specialty’. In this work, another paradigm has been used, as acknowledged, alternative to traditional economics, that always existed: the institutionalist approach (which has always opposed that called or considered ‘positivist’), that has still not been made operational, and moreover visible and alive, as was seen in actual areas of the welfare state, guided by political choices, due to sufficient knowledge and data appropriate to the interrelationships and interdependencies between the various flows of the economic system (at various spatial scales with related justified autonomy), and above all between the monetary flows and some real results of action. Joseph Stiglitz, a widely heard economist among the contemporary ones, for the number and importance of roles undertaken, can well represent a champion of economics of our times, continues to highlight that the ‘invisible hand’—the metaphor that has ruled and conditioned economics, from its origins as a ‘science’—‘is invisible because it does not exist’. And he announces that the loss of faith in the ‘Invisible Hand’ has encouraged economists to find new paradigms, making clear what is intended by such research. This academic movement is called the Institute for New Economic Thinking—INET).15 xl Franco Archibugi The ‘Programming Approach’ and the Demise…

On the contrary, since its first reflexions, in the eighteenth century, economics seems to have asserted in the world, if not demonstrated, that the nature of human behaviours is such that—if left to operate freely, without too many ‘rules’ and ‘constraints’—it can find by itself the adjustment to, spontaneously, suitably manage its troubles and crisis, and to achieve the optimum balance and benefit—in the public and individual interest: like the famous metaphor, of an ‘Invisible Hand’, used sometimes by Adam Smith—undoubted initiator with his book of, in fact, an ‘Inquiry on the nature and causes of the wealth of Nations’ (1976). Of course given the circumstances and the available means and tools. Thus, since the first time of the economic reflexion, the objective (or the objectives) of the so called ‘economic science’ has been addressed and limited to discover how this machinery of the economy works, and on the basis to which behaviour—mostly individual—the men are trying to avoid the damages of crisis by themselves, but only in the aim to mini- mise and repair the damages, but not to cancel the original causes.16 People limited themselves (with the ‘economists’, but also the public opinion) to discovering which unknown ‘laws’ (political, customary and so on) were working among men and among institutions, and neither subordinate to the will of the operators, but innate and independent from the Nature (internal or outsider to the single individual), just like an earthquake event. The status quo ante, without much analysis of its benefit and risks, has remained the reason justifying any kind of safeguard, any kind of intervention at short term rescue.

4 The Historical Roots of the Crises and Failures of Economics

Therefore, since its first expressions, in the eighteenth century, economics has been oriented, in the world, to sustain and convince (if not, indeed, to demonstrate), that the nature of human behaviours—if left operating Franco Archibugi General Introduction to the Whole Trilogy… xli freely, without too much rules and constraints as mentioned above— would find by itself, in other words ‘by nature’, and by personal utility, a ‘spontaneous ordering’, the suitable adjustment to achieve the self- maximum equilibrium and benefit, for the ‘public’ and ‘individuals’ interests, given the circumstances and the methods at its availability. People pressed, with the best intentions and the irremissible motive to improve bad situations, could ‘intervene’; and so doing, could ‘interfere’ with the natural course of the events, that—as doctrina docet—find only with time the removal of wrong (conscious or unconscious) acts; that somebody, actors of the economy or the governments themselves, has thought to do. However, this idea has never succeeded in persuading entirely many economists and also much of the public opinion. The arguments that were used at the original basis of economics have never persuaded on the possibility that public governments were able to truly adopt a laissez-passer, laissez-aller regime, faced with urgent needs of immediate interventions and challenges of social crises in economic trends. And no-one ever believed (although follower of the most extreme liberalism), that it was possible to nonetheless avoid, in some way inter- vening, seeking to prove (maybe without the conviction and still harbour- ing a secret trust in the ‘invisible hand’), that some anti-crisis intervention policy should have been duly and mandatorily adopted, in the area of redistribution of sacrifices, in the area of interventions against the inequal- ity of the effects, of the appropriate actions considered harmful. In other terms, it has never been accepted that the way to satisfy the need of equality of rights and duties of the individuals would not exist, and all together in respect of societies as a whole. The need of believing to face through appropriate techniques and interventions (in the nature and the know-how) in the economic crises, without protecting citizens from the damages of an excessive confidence on the spontaneous auto-regulations, should it not induce to implement a ‘civil’ life in social coexistence in the society, in the respect of rules that could guarantee for all citizens, not only political and civil justice but also economic equality? xlii Franco Archibugi The ‘Programming Approach’ and the Demise…

The history of economics is characterised—since the successful foundations of nation-states as ‘democratic’ states, and of the government’s authentic expression, in some ways, of popular will, through a free universal suffrage and measured—with a range vast enough of relative solutions—for the economic equality issue, whether in the direction of the dis-equality of the individual wealth or incomes Taking into account what people have obtained, in some countries, with extreme and scandal- ous tolerances, or what have obtained with the formation of private financial powers, free from any kind of national or international political direction and control. And so the idea is strengthened that our servitude is in contrast to traditional ‘indicators of economic success’ accessible only in ‘real’ and not only ‘monetary’ terms—as Myrdal, Frisch and Leontief (and a hundred others) recommended and like in the family of the United Nations, not sufficiently direct and supported (above the old diplomacy)—with stable engagement by different governments of member states began in the past but that did not persist in doing.17 The use ofmainstream economics is now consolidated but that does not make relevant reference to the ‘post-industrial ’ transformation of western countries. This should be the principal need of economic enquiry, dealing with actions on which individuals, as thinking beings, and above all as expert economists in the field of political economy, could already do something. In other words, the hope is shattered that, at the end, humanity, in the field of economics, that is in the field of ‘human’ relations, carriers of a certain intelligence, can become architects of their own preferred desti- nies, at least those that are not at the whims of natural events. The more well-known names of these economists to whom I refer are, for instance: Gunnar Myrdal, Ragnar Frisch, Leif Johansen, Jan Tinbergen, Wassily Leontief and others (not in the first front). Some of the last, also attained their own personal fame, not adequately built (and/or) achieved (as we will search to do in this Trilogy, that gave a positive assessment to the publication of this work). Franco Archibugi General Introduction to the Whole Trilogy… xliii

5 The Inevitable Starting Mistakes of Economics: The Improper Influence of the ‘Natural Sciences’

5.1 The Economics from a Science of Being (‘Positivist’) to a Science of Doing and a Science of How to Do (Programming)

The first capitalist society has produced an economic reflection (economics), in its own image and likeness, based on new dominant phenomena, that were give as observed, but that do no longer corresponded to present-day realities. The historians of Capitalism and the historians of economic thought (from the beginning of the eighteenth century18), even if responding to different questions, in reality dealt themselves a very tight hand.19 In short, the economists began to ‘discover’ or ‘construct’ stable, universal, aprioristic behaviours, but still based on past experiences, those learned in the textbooks, of an outdated capitalism. The economists, studying decisions of active operators, at the moment of the action, can find situation much different from those faced in the moment of action from those learned in the textbooks. Were brought to consider them stable, immutable, to bring them to the moment changes of events and actions that they decided, have fixed some behaviour ‘principles’, insuf- ficient standards to be used to ‘explain’ the reality they wanted to explain.20 I do not deny that among economists, in their two hundred years (from the mid-eighteenth to the mid-twentieth century) there were not many detailed differences in explaining economic phenomena. The initial controversy (the above-mentioned metodenstreit in Germany) rebounded at once everywhere, taking other forms over the years, from ‘evolutionary’ economics to that, parallel, institutional economics.21 But all this happened at the cost of a flattening of the debate on the basis that economics and other social sciences must be based (the objective evolution of events in the face of innate logic of behaviours). And at the cost of not questioning if and how it was useful to improve the management of governments, in required cases. xliv Franco Archibugi The ‘Programming Approach’ and the Demise…

One thing is now for certain: that its utility was conditioned not on the veracity of such divergences, but from the effectiveness and feasibility of their applications. Economics developed in its 200 years of life, of which we said, under the prejudice of the ‘scientific’ positivism, deter- minism, naturalism and jusnaturalism, were working like a theoretical system of hypothesis of behaviour by actors/decision-makers (almost all the political economy developed from its origin to now) that was never verified in its assertions, and never proved in its real effects.

5.2 Irrelevance and Risk of ‘Aggregation’ in Political Economy

This group of economists was very critical of the misleading modelling elaborated by some economists and (yet worse) also by some ‘econometricians’, addicted to the ‘mainstream economics’, in order to capture the systemic relations (always at risk of inane ‘regulations’) between real life phenomena that have no importance, because without sufficient details and substantial disaggregations, that make the difference. They had the tenacity to insist on vigilance in spite of the irrelevance of econometric work based on aggregated phenomena that were of limited meaningfulness and, even worse, easily misleading if projected in the time. In the attempts to develop technical proposals, and to facilitate a closer cooperation between analysts and politicians (represented both by the institutions and by the more important associative forces of civil society), those economists endeavoured to provide more than just actions equipped to decide on political choices (the PAF) based on the objectives at their base (or ‘final’ or ‘structural’) of the society or community, but also to ensure a more effective control of the implementation of choices and a permanent updating of the objectives of the actions. Leaving aside that even this idea has been reduced to be used also like a prescription for political decision-takers, especially in consideration not only of the interests of some upper-middle privileged classes (the lobbies or companies and professions); but we have been still incapable of drain- ing a majority of political consensus in the elections, unfortunately also because of the organised interests of that ‘middle class’ (also owners of Franco Archibugi General Introduction to the Whole Trilogy… xlv little properties) and promoters of banquets amply seasoned with toasts inspired to the national sentiments. And also, sometimes deceived from the perspective of futuristic ‘open societies’ (open with a radical removal of traditional roles and classes). And nevertheless, there is eagerness to conserve their social and economic distinctions, with respect to the massive formation of labour classes. While, often protesting against the political leadership for the loss (rather than for the gains) of their relative standard of living and for the feared loss of same past privileges and of the benefits of thestatus quo ante.22 Thus, the conservative field, disturbed by too much egalitarian policies and hostile to the innovations in favour of more social equality and toward any kind of historical and ‘cultural’ changes, is chosen.

5.3 The ‘Original Sin’ of Economics: Its Self-Delegitimization

Economic theory (economics) met the legitimisation of these economic ‘freedoms’, almost reaching a level of an almost anarchic ‘liberalism’, that reminds us of the old regimes of the pre-Enlightenment World, the ancien régime, that was not aware of Constitutional democracies, Civil rights, and the trend (revolutionary) toward equality (Egalité et Fraternité). Regimes, therefore, with reflux—that were dominated by postulates, legitimistic assumptions, unquestioned beliefs, anachronistic abuses that overall would have deserved, and still would deserve, to be judged with the instruments of a prehistoric anthropology. Economics has also contributed to the ‘technical’ delegitimisation, in diverse ways, of public action, benefiting from the fact that the promoters of private individual action, businessmen, in an era of great social and structural changes and innovations, always belonged to the more com- fortable classes and families, and for this reason more acculturated, and therefore generally more competitive and gifted, and knew how to take advantage of their privileges and right from the beginning, for their own children that are always the better ones, more motivated and equipped in exploiting the opportunities and the more selfish in their own affairs (naturally with all the numerous ‘exceptions’ that serve to enrich the pic- xlvi Franco Archibugi The ‘Programming Approach’ and the Demise… ture in an exemplary and glowing manner) but who have little impact on the general evolution of the shape and on the basis of a social injustice at the starting point. This has contributed to the creation of problems related to the opportunities to express preferences for the progress of equality, in as much as scarcely compatible with other forms of incentivisation of social and economic progress that were often in conflict with and less compatible, with higher successive economic incomes. And so it was the case that no more than two centuries ago, in different contexts and structural conditions, in which economists, due to their scientific approach, were potential ‘guardians’ of the status quo ante. They were ‘conservatives’ naturally, because the best thing to do in fact was… to do nothing at all; (so was said), respecting the so-called laws of economics, without creating any sort of violation or special distortion without political ‘intentions,’ committed to incompetent individuals or politicians.23 So, today, we face the crisis or recovery of well-being with economics, in the absence of any performance on which to base the cases and places in which it would useful and productive to repair damage of recurring crises. It would have been a useful experience—what a pity! In such a way, one cannot do but thinking of becoming, a diverse, general politico-economic theory, that is not succubus of the positivistic approach, and that is not a part of the a priori of rebus sic stantibus or of the ‘equal starting point’ formula (that would be to define, in conservative economics of the status quo ante), social classes that exist for creating difficulty in rapid (and better) change in things that are considered pertinent to rights (purchases or not, they tend to be, in every way, a conflict of compatibility in respect to other rights and constitutional reforms) alternatively compatible ex novo with the ex ante regime. Economics, despite its omnipresence and capacity of invading any interests or motivations with its think tanks (through which we all have passed at one point of our life), its ‘tricked out’ academic institutions, its wordy literature and so-called ‘scientific’ life, assumed in every angle of social life of humans, did not ever present any true and authentic credentials of credibility, success, utility, or certain results. Franco Archibugi General Introduction to the Whole Trilogy… xlvii

5.4 The Classical and Neo-classical Conservative Function of a System Already Operating to Be Protected: and to be Helped in Its Development

The main value of the intentions of those great economists who unfortunately did not receive adequate recognition for their proposals in academic or in political circles, was to avoid that the more important choices be taken, in the political field or in the field of academic prudence, as they could be prejudiced and forced by conditions already compromised by binding situations, dictated prior to the presence of methods and interests of the status quo ante, that is, the ‘economic forces of the market’ that are always prioritised in de facto situations and, as such, are genera- tors of economic ‘limitations’ for the same choices, and certainly do not work towards a world that is increasingly egalitarian and fair, rather towards the survival beyond the crises without causing too much damage or, in other words, ‘least worse’ scenarios. Such a vision, adopting the age-old conservative formula—say as far as possible out of the crises and sustain business—is aimed only at ensuring wealth and wellbeing for the few, at the expense of the wellbeing of others.

6 The Alternative Idea: The ‘Programming Approach’ (After More Than a Bicentenary of Classic or Neo-classical Predominant ‘Positivist’ Approach in Economics)

6.1 The Difficult Road of the Programming Approach, from Classical Liberalism to Neo-classical Liberalism

Throughout history, economics did not follow the road of the PA. Far from it. It could have been useful—as already argued—to not block economics—or stiffing it—in the research of natural laws of behaviour, that, if used without adequate methods for each sector and without xlviii Franco Archibugi The ‘Programming Approach’ and the Demise… discernment, could have surely created situations of incompatibility and fatally condemned to a zero implementation. Since the first organic writings (the most noted treaties on economics by early ‘classic’ writers and scholars) which constituted attempts to gather thoughts and arguments destined to be the essential common scope on which concepts were based (probably with different titles). Common to all these attempts was defining, as better and more comprehensive analysis, the functioning of economic relationships (as observed in the centuries in which they occurred, typical for the intensification of such relationships) formulating general principles present and functioning in all the ‘economic’ manifestations and activities, searching for explanation of any event, and concerning any subject to be evaluated and deserving for operational recommendations. Therefore they did not at all change the ‘positivist’ approach of economics of the preceding century, translating it even more in normative keys, in ‘programming terms’, in private law and not in public law, which, more consistent with the transformations in course in social power structure of the countries in question, and the emergency of a private statute, always more defined by abourgeoisie enterprising, that was increasing in activities and powers, as getting hold of the economic existing ‘capital’ (lands and natural resources) and that was beginning to gain—exploiting the benefices to be alone to have at disposal the techno-industrial capitals means (‘capitalisation’ ) of the existing capital means (inherited by formal debacle of the legitimism) and the, more and more, improving the private individualistic management capacities. This occurred without giving answers to the structural transformations in the production systems of the new century, the nineteenth, half ‘Revolutioned’ (and, for this, in permanent claim of freedom) and half also ‘restored’, more and more to orient to re-establish uses and habits of the ancient order, the ancient defence order of the ‘elites’ (both of the aristocrats of noble descent and the new ‘aristocrats of money’) arriving to save the power elites, whether political and economical, under the constant surveillance of institutions of conservation and the threat of regimes event more decisively oriented in favour of the new emergent and rich bourgeoisie, and under the influence of the old occult solidarities, that appropriated of the common ‘capital’ wealth. In this way this Bourgeoisie sacrificed for all (including peasants and master craftsmen of the ancien régime), the full immediate functionality of Franco Archibugi General Introduction to the Whole Trilogy… xlix the expected public and constitutional institutions, putting off the fulfilment of revolutionary objectives and obtaining for the few and powerful and privileged friends (a small minority of them became entrepreneurs and businessmen in the growing field of the ‘industrial revolution’). So, in the first half of the nineteenth century, people searched to operate in all of Europe, or in all the world—in inverse function to greater or lesser rapidity or to the ‘power-State’ really democratic; given the absence of any seriously public function, only with exception of supporting private manoeuvres. The general reformative idea would be that of trying the average functionality of simulated systemic reconstruction of the bounds and obstacles that are actually present in reality, in current situations that the theorising persists in considering, as impossible and inviolable, rebus sic stanibus, for formulating feasible and efficient political alternatives. Therefore, the experiments would have significance if applied in the framework of a concomitant presence of key factors of reform connecting the sense of the experiment itself. So, today, we face the crisis or recovery of well-being with economics, in the absence of any performance on which to base the cases and places in which it would useful and productive to repair the damage of recurring crises. It would have been a useful experience—what a shame. In such a way, one cannot do without thinking of becoming, a diverse, general politico-economic theory, that is not succubus of the positivistic approach, and that is not a part of the a priori of ‘rebus sic stantibus’ or of the ‘equal starting point’ formula that would be to define, in conservative economics of the status-quo-ante, social classes that exist for creating difficulty in rapid (and better) change in things that are considered pertinent to rights, purchases or not, they tend to be in every way a conflict of compatibility in respect to other rights and constitutional reform, alternatively compatible ex novo with the ex ante regime. Economics, despite its omnipresence and capacity of invading any interests or motivations with its ‘studies offices’ (through which we all, economists, have passed at one point of our life), its ‘tricked out’ academic institutions, its wordy literature and so-called scientific life, assumed in every angle of social life of humans, did not ever present any true and authentic credentials of credibility, success, utility, or sure results. l Franco Archibugi The ‘Programming Approach’ and the Demise…

For anyone who has read the works of these early economists, experienced (written and read) in the time of persisting legitimate relations, set to disappear (in the eighteenth century), with significant historical reference (particularly to Great Britain), after Smith, Ricardo and other ‘Ricardians’.24 But with the new generations that embarked on social life, in a still more defined emergence of a new ‘bourgeois property’, an intellectual class was formed that appropriated itself of the educational and scientific institutions of the country: the renowned colleges and universities in England, more than elsewhere, where, a literature consolidated, preva- lently didactic in political economy in the two historical universities of Oxford and Cambridge, and others of lesser prestige, in a network of well- known and prestigious scholars that became a recognised heritage of national communities through their transformations and changes.25 And so the ‘positivist’ approach of economics from the century before did not evolve into anything, translating more and more into normative terms, but in programmatic terms of private rights (and not public), which were more in line with the transformations taking place in the social structure of the country and the emergency of a private statute described more and more as ‘Bourgeoisie’, that was enhanced in order to become owners of the only existing economic capital of the time (land and natural resources) and that had started to prosper—taking advantage of the benefit ofcapi - talising on the existing technical-industrial capital—which continually improved management capacity. But having their hands more and more free from anything that was not compatible with the economic functioning, and therefore without a public function not in its stated interests. ‘Liberalism’ evolved with the classic authors of the eighteenth century expressed by the plea of ‘laissez faire’ and of the ‘free market’ condition. But the evolution in this sense has been not developed more rapidly towards rather a kind of ‘individualism’ than ‘liberalism’ as policy science. The individualism has taken the role of the ‘laissez faire’ and the free market cancelled any kind of liberal conception of a society freely organized. Here begun an equivocal meaning between liberalism and individualism as philosophical norm than until our day of a State democratically deeply structured.26 Franco Archibugi General Introduction to the Whole Trilogy… li

6.2 The Erroneous Historical Roots and Directions of Economic Policy

The greater task ofeconomics is not to ‘explain’ how the economic factors work, in a restrictive way, but to study and to research how to obtain by the majority of the decision-makers citizen the actions considered aimed to improvement the ‘Common Good’. ‘Liberalism’, matured near the classical authors of the eighteenth century, expressed by the well-known exhortation to the ‘laissez-faire’ and the operational concept of the ‘free market’ was ploy of the cultural impotence in providing a real ‘science’ of the economy, convincing, that knew how to maintain the social status quo ante, in a way that defined itself as increasingly ‘neutral’; and in the contradictory intention of questioning: how to conceptualise and define a Common‘ good’ for the community or collective evaluation (that was reasonable to consider such)? and how to formulate an holistic programme of action, that was rationally coherent, defined in its time and in its preferences? as already described in section “The Difficult Road of the Programming Approach, from Classical Liberalism to Neo-classical Liberalism”. We can ask ourselves: why this route, the PA, was not taken from the beginning of economics? We ask ourselves in effect: why not start from the ‘aims’, rather than from the ‘restrictions’? Why not start from ‘social needs’, in order of priority, as ‘common good’, rather than from the dis- tributive difficulties that clearly rewarded those who already held capital and the same well-being of the privileged and the ‘power’ of those who held it with more effectiveness and vigour? Why were aspects and decisions inherent to the economic management of the collectives, coexistence, and therefore also of nations, emerged and emerging (that was the real worry of freedom by powerful and by the currently exploited), of the overwhelming majority of peoples, not the starting point of early ‘utilitarian’ reflections of economics? I think that the first reason is to be attributed to the type of cognitive approach, and therefore also epistemologic, of economics, that was that inherited from the general ‘scientific’ spirit of the eighteenth century (of which we stated) that had produced great progress in the natural sciences in that century spread also in the eighteenth century. I think that the lii Franco Archibugi The ‘Programming Approach’ and the Demise… reason for which this path of the PA was not taken since the beginning of economics, depends, unfortunately, on a factor that humanity cannot— for other reasons—be but proud. In fact, we should not forget that ‘political economy’ (Economics) was born—at its roots—under the influence of noble conquests of the human kind in the areas of natural sciences. And the search for ‘inviolable laws’ of the economy, as in natural sciences. Firm remained however this basic presumption, widely shared at the individual level, more superstitious than rational, more magical than ‘realistic’, that from public powers could not become natural damages, implemented spontaneously in the spirit of each individual, naturally good, if left to his own devices, without public interventions, things would unfold to the best, thanks to a kind of spontaneous compensation of the mutual damage incurred; like a judicious ‘invisible hand’. All this prevented economics from dedicating itself to studying more the modalities of functioning of the metaphor (invisible hand), rather than doing an in-depth study of how this presumed ‘invisible hand’ operated and could render ex ante more visible and manoeuvrable, in order to in some way understand how to render it less damaging when it caused damage, and render it a more useful hand to reach the desired community programmes (while in the certain forecast of their changes in the long term). It is supposed that the intention would have been that of accompany- ing the eighteenth-century democratic revolution with an ‘economic science’ addressed towards helping the implementation of the more general revolutionary cultural objectives, and more useful to better understand how to practically achieve the governing of economic events according to programmatic models (constructed to be useful to new decision-makers, representing popular will, therefore ‘decisional models’); and not models to make forecasts (and therefore not programmes); that is ‘growth models’ or ‘development models’, based on a ‘natural’ or ‘positive’ evolution of events, and not instrumental models to analyse the effects of eventual decisions of political choice, in the given circumstances. The epistemologic approach would have been completely different, completely overturned. But no-one noticed this possibility. Franco Archibugi General Introduction to the Whole Trilogy… liii

6.3 Results: in Their Turn, Should Be Considered Consistent with the Programs Ex Ante Discussed and Selected Publicly with Great Prudence in Respect to the Means and the Knowledge Available for their Implementation

The purpose ofeconomics is not to ‘explain’ economics regardless of the ‘private’ interest of individuals (families, social groups, and any institution that operates without considerations on the ‘common good’). Therefore, it was expected that the new ‘revolutionary’ frame scholars would give up believing only in the ‘nature’s providence’ (alias for the ‘invisible hand’), that wished for by the ‘scientific’ and ‘neutral’ indiffer- ence of ‘economic laws’ that are ‘invisible’ (because they are not existing). But, from the beginning they were committed to better understand the factors and complexity and interactions of past events. With only one difference: that here human behaviour would not be ‘predefined ’ (as in the case of natural factors in natural sciences), but be ‘programmed,’ with attention to the worst effects that could come about fromcrisis and continuity—for example, employment and other variables of social well-being—with scarce flexibility. To obtain this, more research should have been directed towards additional methods, more spirit of collaboration amongst technical and political participants of the community, and been ready to negotiate, renouncing to sovereign partiality between communities, rather than oppose, sabotaging for any reason the evidence, experiments, shared changes, losing privilege in exchange with greater and measurable benefits, in order to create system of collective bargaining, with great margins of unsuccess, but also with ever more strong and securely rational hope, in any kind, of the laissez-faire or laissez passer, that which had pervaded the end of the ancien regime, with words of fidelity and conservation, well calculated yet fallacious. Throughout this mistaken path, for which we will further delineate the factors below, voices of dissent were heard, though were non aimed at contesting its first ‘error’ (the original sin’ of the origins) that had brought economics into a situation of general inefficiency, where the great minds of mainstream economics suffered, that preferred to counter and ignore the damage made to the real progress of the ‘science’; in comparison to any liv Franco Archibugi The ‘Programming Approach’ and the Demise… other natural science, in which scientific progress, highly celebratory, derived from a secular tradition that had normally produced scientific effects that were favourable in any field, and in the current lives of men. In addition, it should also be noted that economics came to cover this unique and symptomatic effect. While in the greatest progress within all scientific disciplines: natural, scientific research had produced more or less, important benefits even for humanity; and it had created—in a public space—outside its own discipline, in trust and for advancing scientific findings in the field of human hope.Economics is the only scientific discipline that, from the beginning, had generated a genuine distrust in cult and the public space, from its first historical manifestations, recom- mending to managers of ‘public goods’ minimal possibility of intervention and credibility of research, inspired by and reflective of having positive effects in the system of economic relations within the community. Overall, economics, as research and study, had consolidated a sort of diffidence and an organic and general objection from its very beginning, on the essence of research and study, definitively discouraging its very own reason for being. And so even if economics had one of the greatest developments in the history of men, in means, resources, structure, and apparatus destined for research, amongst the sciences, well recalled, satirically by Wassily Leontief in his courageous, Presidential speech, the yearly appointment as a Congress of the American Association of the Economists in 1953. But the arrival of the PA into the arena of economics, despite the success of its champions (to whom many Nobel prizes in Economics were awarded) and the refining of techniques introduced by them (Frisch was largely celebrated as the founder of econometrics), it still was not followed or known as much as it should have been and deserved as methodological acknowledgment and the results with the due implementation at the government, at least. In this Introduction, I would like to conclude firstly that the notion that economics, instead, was founded on the necessity of finding apt and relatively efficient instruments for the new post-democratic, post-enlightenment, post-revolutionary order, to achieve programming objectives, formulated to follow the great Cultural Revolutions of the Eighteenth century (Freedom- Equality-Fraternity), the true core of the new regime, it was positioned to construct a network of postulated covers (so-called ‘scientific’) to protect the well-being, for those ready and able operators: not to produce real Franco Archibugi General Introduction to the Whole Trilogy… lv nouveau ‘riches’ of the labour population, for increasingly vast and more equal distribution, but also to ‘explain’ how not to block the way of the most restricted of privileged class initiatives. From eighteenth-century writers on economics, the problem of adapt- ing the programmes to laws was born, rather than emanating the laws, but to honour the programmes. An inconclusive debate arose in relation to these ‘laws’ of economics:

–– first, whether it exists at all; –– and if it was so important not to interfere, as said by the managers of public well-being, in the initiatives undertaken for one’s own advantage and individual enrichment, without sacrificing any attention to the public good because it would have been, in any way, advantaged by the knowledge of programmes, in order to subordinate them to the planning aimed at surpassing infinite difficulty (first amongst themselves); –– to carry—if available resources for obtaining social objectives existed, according to social justice, and not according to the natural distribution of the so-called—supposed natural laws of economics.

An abstract debate was born, in which no social costs emerged, not only individual ones, undefined programmes, that developed for roughly two centuries without any positive effect or improved capacity to ‘resolve problems’. I consider this to be the ‘original sin’ of economics: that by creating a permanent and organic delay in the transfer of power and economic goods from the ancien régime (land and other resources, as well as monetary resources in the hands of the aristocrats, church and bankers, from the hands of the ‘men’ of the times to the entire body of citizens—no longer objects, but knowing subjects in power by virtue of their representatives, as the revolutions of the Eighteenth century, had objectives) to the successive centuries (Nineteenth and Twentieth centuries, in fact ‘restorers’). This had the impossible implement (and so, in this way, the constitutional and structural democratic revolutions were set in place by the leading classes). Hence, after two centuries of failed attempts, of crisis experienced in which economics emerged as being impotent in its principle of constitutional new interventions, and even after the two horrible world wars, it seemed still in line with the conservation of the ancien régime. A regime lvi Franco Archibugi The ‘Programming Approach’ and the Demise… still unliquidated, by its values of constitutional reform still in course, it was proposed and reclaimed at the same level of economics, by an isolated group of economists in the name of their spirit, which had been forgotten under the distraction and oblivion of those in their time, errors still pervading in our present.27 That is why economics still today has not been able to follow the new ‘way’ indicated. The eighteenth century ‘man’ embodied ‘liberty’ (the first expression of the revolutionary call: Liberté, Egalité Fraternité). The founders ofeconomics , who proposed to explain the facts and fac- tual economic behaviours in a ‘determinist’ or ‘positivistic’ way in order to discovering its ‘laws,’ as if they were ‘natural laws,’ to use for a preven- tive analysis of universal man’s behaviour, individual or collective, when they act in an active world, but without any vision or choice in the mid- or long-term, without any liberty of choice. But economics wasn’t able only to obtain ‘economic’ liberty, of single individuals and families, to seek and enhance their use of resources gained for ‘snatching’ with the privatisation of research by nobility with an oper- ation that, as you would say in French; (‘ça revient au même’). An opera- tion in which the capital/product relation raised to the stars, thanks to the scientific and technological revolution over the centuries, not neces- sarily ‘eternal’ or replicable in other ways. That indeed was not the goal of the ‘Democratic Revolution’ envisioned and planned for by the ‘Enlightened ’ ones!

6.4 Results: Should Be Evaluated Through Methods and Monitoring Systems Ad Hoc, Connected with an Ex Ante Planning Time (Yearly or Medium or Long Term Horizon) Assuring the Ordinate Renovation’s Evolution of Themselves Ex Post, by Time

A world therefore still unprepared, politically and culturally in the legis- lations as well as the technologies to receive in an adequate way the request of the democratic revolution; that thought out projected by the enlightened people, in multiple directions pressed ahead by a group of tenacious Franco Archibugi General Introduction to the Whole Trilogy… lvii scholars and some pioneers engaged in the study of nature, in the natural knowledges, and overall knowledges of man and his society, more equal, more free, more creative, more solidly. A society capable of building by itself its own destiny with the will, participation and respect of itself and of free institutions by itself created, through a secure and guaranteed use of reason, with debating and consent and not by force and violence; without the risk of going back to overcome experiences of being overwhelmed and the abuse of power by the strongest, most powerful, wealthiest and most evil, over the weakest, poorest and most resigned (most resigned with respect to good and bad luck)—in any case existing—but in a large measure most subject to program, with good intentions and good use of knowledges and a great confidence in the goodness of humanity itself and oriented naturally toward the cooperation and the use of common sense. From this world of enlightened people that arose all the best most beauti- ful initiatives of the modern world and the hopes of a more ordered and happy society. There arose also the idea that could be possible that the economic welfare could be better distributed, with knowledge and intelligence, with ‘economic science’, with scholastic education on the production and exchange between men, without, selfishness and injustice prevailing as has always happened without order and policy action.

7 The Late Advent of a ‘Programming Approach’ Within the Economics: The Most Theoretical and Meaningful Examples

Only in the last quarter of the last century, only after the relatively chron- ological conclusion of the Second World War (1945), a group of European solitary economists of great importance and of great value, which worked without being very coordinated among themselves, have contested the initial approaches of economics since the origins, proposing a completely different approach, called the PA obtaining a fair and right a place in the history of economics. It is time that we make of them a more explicit reference and revival. lviii Franco Archibugi The ‘Programming Approach’ and the Demise…

7.1 Gunnar Myrdal

The first among them was, just, Gunnar Myrdal (1898–1987), Swedish, who succeeded, with a vast exploration of the problems of social sciences (and with serious doubts, left unresolved, if he was to be considered an economist or a sociologist,28 or a research methodologist) to call into question a series of opinions little consonant to the institutional disci- plinary axis existing in economic sciences themselves.29 He published a series of books directed towards his favourite subjects, that strode between economics (as an inherited at its time with his approach of the scientific-positivistic and specialist kind), and the other social or ‘human sciences’, that could not be ignored or excluded as they were equally fundamental in the subject of the PA. Questions, for example:

Is an economics free of political prejudice possible? If ‘social sciences’, including economics, should not make explicit their values and motivations?; If social sciences can be ‘scientific’ and in what sense?; What are the ‘principles of planning’ to adopt to go ‘beyond the welfare state’ in a concrete and pragmatic way?

All questions, above mentioned, inspired to deepen and find ways of managing fact (moreover universally found and ascertained, but often forgotten by those who have are intellectually invested and gifted not to forget), that there do not exist economic, social, moral or psychological problems etc., separated in a specific way, but only individual problems, that can be resolved only if on each one of them, there is a unified con- vergence of all the possible measurable options from different disciplin- ary points of view. And only facing in a ‘unified’ or ‘integrated’ way, taking into account different points of view from which can be analysed and managed in their solutions, that of a PA (usually accompanied by adjectives such as ‘strategic’ or ‘systemic’). So, it was Gunnar Myrdal, the first economist (rather late with respect to his natural course of life30) who confronted with critical analysis— around the 1930s—the pathway of economics in the previous centuries, reaching the conclusion that, instead of continuing the analysis of the economic phenomena as if they were natural phenomena, it would be more Franco Archibugi General Introduction to the Whole Trilogy… lix useful to concretely study the ways in which they should have been guided to achieve the desired and hoped for effects, corresponding with programming objectives in the communities led by competent decision-makers. Myrdal called it ‘the political element of economic doctrines’ and, at the end of the war, wrote a book entitled ‘Beyond the Welfare State. Economic Planning in the Welfare State and its International Implications’ that was the first attempt to give sense to a PA. But the idea much as it was widespread among economists was not able to completely persuade other economists and even public opinion. Therefore, it was turned down in the classical thought of economics.31 The possibility by public governments to successfully manage useful actions for collective well-being, controlling with other appropriate actions the natural selfishness of human behaviour. In other words, it was never accepted that there was no way of satisfying the need for equality of rights and duties. Nor that it was possible to face—with rational techniques and interventions—economic crises, and protect citizens from the damage that could result from too optimistic and superficial a management of spontaneous natural self-regulations. And that, in the end, could be non correct to try and achieve a ‘civil’ coexistence that guaranteed all citizens such an equality, firstly economic, as well as political and democratic. So it was thought and theorised—as claimed by the revolutionary aspi- rations of the time—that it was enough to replace the Natural Rights of the ancien régime, blessed by God, with ‘Declarations and Regulations’ established by the ‘People’, to achieve a new egalitarian social condition. Trusting the mythical, infallible and supreme ‘invisible hand’ operating in the free game of the ‘market’. A game that remained instead in hands other than invisible. This mitigated spontaneous mechanism of the ‘invisible hand’ demonstrated that it did not work. It is active and operating only in short-term competition and in small markets, but it does not work in large markets in medium and long term, and at mass production scale. Where, instead, the ‘invisible hand’ does not exist anymore, is where ‘administrative prices’ reign (under both private and public control), on which preferences and interests of small market units have little or no influence. lx Franco Archibugi The ‘Programming Approach’ and the Demise…

7.2 Ragnar Frisch

The second economist who immediately dedicated himself to overturning the approach, was the Norwegian Ragnar Frisch (1895–1973), established at the University of Oslo, with his research and his students and disciples, and his experiences in some countries of the ‘third world’ (such as Egypt and India). He was the first Nobel Prize winner (shared with Jan Tinbergen, after the instituting of the prize in 1969), arriving at config- uring and describe with great efficacy, a ‘general method of advanced macro-economic and democratic planning’, to constitute the basis of further scientific progress ineconomics (that has drawn particularly in the Vols. I and III of this Trilogy with wide recourse to an orderly re-editing of original texts by Frisch, with the Memoranda of the DE-UO (Department of Economics of The University of Oslo).32 Ragnar Frisch, on his part, as the excellent mathematician that he was, thought of structurally innovating the importance of quantifications, by numbers and measures, useful to install a normative political economy, aiming to improving the methodological instrumentation, creating standard operating systems for the use of the economists, in the general function of ‘analysts’, as technical supporters of political decisions and choices in the management at significant scales for political governments programming (regional, national, international and world-wide scales), in the hope of stimulating an increasing ‘systemic’ integration of these activities, raised from an intense due ‘strategic’ planning at each scale. He asked for an intense cooperative intentional will of harmonisation at different operating scales from a technical point of view. In the Vols. I to III of this Trilogy, from the Chaps. 3, 4, 5, 6, and 7 of Vol. I and the whole of Vol. III, I tried to exhibit the Frisch guideline of planning process using his own prose, of a formation didactic way of learning of an operational standard system ad usun of analysts by the economists as technical supporters, of decisions significant as political governments at meaningful various scales. Frisch succeeded with a bunch of friends and students in creating at an international scale a ‘movement’, rather significant in this direction, an ‘Econometric Society’ that he and other co-founders were not able to, during the second WW years, represent what Frisch and his co-founders intended for ‘Econometrics’, id est the five point following: Franco Archibugi General Introduction to the Whole Trilogy… lxi

–– the abandoning of an economics made with generic theorems and sophisticated algorithms, in the matter of economic business and escap- ing expectations, without any real practical consequentiality in the real life of the nations and government, and with a not endurable quantity of theorisations, by a huge of papers of academic journals, books publishing, university lectures and seminars, or ‘scientific’ and intellectual campus snobbery; through a money consuming, without measurement of results and of effective value,33 in the public consideration. –– a critical reappraisal of economics, coming back to be set of public programmes, under mutual compatibility. With related procedures and costs analysis. In other terms, programmes ex ante for each time perspective: annual, five-year- or long-term scenarios (15 years?)—and related ‘reporting ex post’, also of each time perspective results, permanent and time political, on the base of organising a general reinvention (‘Reinventing Government’, as it is called and sanctioned by the US federal GPRA (1993)), and its successful implementation, until today.34

Conceiving, rather, Econometrics (of which himself promoted the foun- dation in Europe at Geneva, together some colleagues, in the 1930s) the