Runaway Capitalism: Taxing Multinational Corporations

Vanessa Ogle’s paper examines the trajectory of neoliberal development economics from European colonies to European reconstruction and the World Bank. In the 1950s, a number of economists began criticizing the increasingly popular concepts of planned economic development and industrialization that modernization theorists recommended for the Third World. Some of these critiques centered on trade theory and especially commodity markets, and promoted free trade and unrestricted market access. But Peter Bauer, Karl Brandt, Herbert Frankel, Gottfried Haberler, Fritz Machlup, Wilhelm Roepke, and Basil Yamey, among others, also advocated a less well-known brand of agrarian free-market capitalism and investment in education at the local level.

Several of these protagonists had gained first-hand-experience in European colonies in the 1930s and 1940s, and after WWII, took a keen interest in problems of European reconstruction. With few exceptions, they were immigrants who fled continental Europe in the 1920s and 1930s to find academic homes in Britain and mostly, in the United States. Most of them were members of the Mont Pelerin Society. In the 1950s and 1960s, the concept of small-scale agrarian capitalism and rural development was increasingly paired with ideas about education and investment in what was now called “Human Capital” by Chicago School economists. In the 1970s and 1980s, these theories entered the mainstream of development economics at the World Bank, where many of them were implemented as part of the Washington Consensus in the following decade. Based on personal papers held at the Hoover Archives, this paper argues for the need to consider the European and colonial origins in formulating the policies that dominated multilateral institutions for much of the 1990s and 2000s.