The Political Economy of Trade Policy Reform : Social Complexity and Methodological Pluralism

1 The last clause is important. If we have little confidence in our model of the economy, or political economy, the value of an extension of any normative statement relative to that economy to a concrete existing economy is considerably devalued. 2 This framing of the issues directly contradicts the claims made for the new research on the political economy of policy reform in Rodrik (1993). I hope it will be clear as the argument is developed that I find this research to be quite useful in auditing the logic of various arguments that have been made for the failure of policy reform and which may constitute some part of an explanation in any concrete case. Social Complexity and Methodological Pluralism " Happy families are all alike; every unhappy family is unhappy in its own way " Tolstoy's famous observation in the first line of Anna Karenina applies, mutatis mutandis, to the political-economy of trade policy: all good trade policy is the same; but bad policy is different in a bewildering variety of ways. As with families, it is not so much that all countries with good policy are actually identical, but that good policy can be characterized in a relatively straightforward way, while there are literally an infinite number of ways for policy to be bad relative to any given underlying economy or political-economy. 1 Since, from any particular state of bad policy there are also an infinite number of paths to good policy, Tolstoy's Law applies with even greater force to policy reform. In a sense, this paper is an extended analysis of the application of Tolstoy's Law to the political-economy of trade policy reform. Specifically, this paper argues that, unlike many of the applications of microeconomic methods to political-economic analysis, simple abstract models of policy reform have very little systematic empirical content and, thus, do little to improve our understanding of the reform process and offer little in the way of compelling support for policy advice. 2 3 Note that this notion of empirical content is very different from that attributed to Friedman in his 1953 " The Methodology of Positive Economics ". Given the extreme simplicity of the models and the extreme complexity and disequilibrium nature of the phenomenon, even framing a " test " approaches fraud. 2 This argument is developed in several parts. First, it is argued that, at least when it comes to …