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Neoliberal approaches to development are generally premised (explicitly or implicitly) on a denial of colonial legacies.
One example is the 'financial repression' thesis -- a big part of the basis for financial liberalization, and also the genealogy of 'financial inclusion'. 1/
One example is the 'financial repression' thesis -- a big part of the basis for financial liberalization, and also the genealogy of 'financial inclusion'. 1/
'Financial repression' normally gets attributed to a pair of influential books on 'financial deepening' and development by Ronald McKinnon and Edward Shaw which both came out in 1973. The books, and especially McKinnon's, have an... interesting relationship with colonialism. 2/
McKinnon and Shaw's arguments shaped a lot of subsequent policy. They still get referenced periodically in places like The Economist https://www.economist.com/finance-and-economics/1999/05/13/finance-on-the-loose; and copiously in IMF Working Papers and staff research:
https://www.imf.org/en/Publications/WP/Issues/2019/09/30/Financial-Repression-is-Knocking-at-the-Door-Again-48641 3/
https://www.imf.org/en/Publications/WP/Issues/2019/09/30/Financial-Repression-is-Knocking-at-the-Door-Again-48641 3/
The gist of their argument is that many developing countries were kept poor by an overabundance of interference in financial markets. If governments over-regulated credit markets, credit would be allocated inefficiently. 4/
Both emphasized implications for access to credit. For McKinnon "Usury ceilings on the interest rates charged on bank loans have emasculated the ability and willingness of commercial banks to serve small-scale borrowers of all classes" 5/
What's telling are the ways they do and don't recognize the impacts of colonialism in shaping the kind of financial systems. 6/
McKinnon probably has more to say about colonialism directly: "In the colonial period, organized banking served mainly expatriates who were engaged in developing exports of raw materials… 7/
Funds would be channeled to banks -- controlled largely in, say, London -- which would then reinvest funds with borrowers whose collateral and reputations were known to overseas bankers" (This is broad, but pretty accurate.) 8/
What's critical is that the problem McKinnon identifies here isn't so much its extractive nature, or the dynamics of subordination and dependency implicit in this description, but the close links between colonial government and banks and restricted access to credit. 9/
He actually describes as 'neocolonial' post-independence financial systems where "where favored private and official borrowers still absorb the limited finance available at low rates of interest, which are often far below the opportunity cost of scarce capital". 10/
So the argument isn't exactly that colonialism has had no significant legacies, more that they can be unpicked quite easily if only the state would remove restrictions on financial markets. 11/
McKinnon is pretty explicit: "As long as potential access to international trade remains remarkably free, as it has in the postwar period, successful development rests largely on policy choices made by national authorities in the developing countries." 12/
The point of all this is that at the root of a lot of contemporary policy on development is a rejection of the possibility that poverty and uneven development are products of colonial hierarchies. 13/
It's worth looking at some of the foundational arguments like Shaw and McKinnon because they had to say out loud in a way that subsequent arguments haven't necessarily that they were explicitly ruling out the significance of durable colonial hierarchies or structural factors. 14/
So piecemeal reforms won't do, if we want to reckon with colonial legacies, which seem increasingly obviously to matter both in the global south and the global north, we need a wholesale overhaul of contemporary institutions/approaches to development. End/
