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Chapter 8 - Globalization in the Periphery as a Morgenthau Plan: The Underdevelopment of Mongolia in the 1990s

Published online by Cambridge University Press:  13 April 2024

Erik Reinert
Affiliation:
Tallinna Tehnikaülikool, Estonia
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Summary

‘I apprehend [the elimination of diminishing returns] to be not only an error, but the most serious one, to be found in the whole field of political economy. The question is more important and fundamental than any other; it involves the whole subject of the causes of poverty … and unless this matter be thoroughly understood, it is to no purpose proceeding any further in our inquiry.’

(Mill 1848)

‘Woe to the vanquished’ – a saying of the ancient Romans – came to mind when I attended a conference in the Mongolian Parliament building in March 2000. As the only non-Asian I participated in a forum addressing the severe economic problems of the country. The local newspapers vividly reported that not far away from the snug heat of Parliament, an estimated 2 million animals pasturing on the plains were starving to death in the bitter cold. Permanent desertification threatened the country, and it was clear that this disaster was manmade. What was not reported was the important fact that the 2 million animals dying during the winter of 1999–2000 were only the increase in the animal population over the previous two or three years. The fundamental cause of the disaster was the same type of diminishing returns that has afflicted mankind since biblical times: too much economic pressure on one factor of production, land, the supply of which was fixed. Rooted in this phenomenon, vicious circles of poverty were already well established.

In terms of economic theory, the Mongolian situation takes us back to economics as the ‘dismal science’, to Thomas Malthus (1820), John Stuart Mill (1848) and even Alfred Marshall (1890). In spite of the recurrence and description of these phenomena since the biblical Genesis, the mechanisms at work in Mongolia during the 1990s apparently were not recognized, even when the disaster was a consummated fact. The underlying cause was clearly not global warming, as the Western press reported.

The more I studied Mongolia in the months that followed, the clearer it became that this nation, vanquished in the Cold War, for all practical purposes was being subjected to a Morgenthau Plan (Morgenthau 1945).

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The Other Canon of Economics
Essays in the Theory and History of Uneven Economic Development
, pp. 215 - 260
Publisher: Anthem Press
Print publication year: 2024

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