Modeling Agglomeration and Dispersion in City and Country: Gunnar Myrdal, Francois Perroux, and the New Economic Geography - Critical Essay

American Journal of Economics and Sociology, The,  Jan, 2001  by Stephen J. Meardon

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This diagram places in opposition: A development which will mainly benefit the big firm and the agglomerated area, and a development which will benefit the whole population. The big firm has extensive and intensive relations with the exterior: with its head office if it is a subsidiary, or with its main partner if it is an associated company; therefore, we shall say that in order to develop the entire population on the whole territory, we must define and then implement interior exchange channels (1988a, p. 63).

Perroux has in mind using government action to turn the "growth pole" that the multinational firm represents, and the territorial agglomeration of selected individuals and commercial units that interact with it, into a "development pole" that benefits units not initially included in its itineraries. The action may be as simple as the creation or improvement of lines of transportation and communication. It may be implemented in a number of different ways, including "the spontaneous agreement of the big firm," "the rational consent of the big firm to direction by the authorities," "methodical negotiation between the firm and the authorities," or "constraining pressure" applied to the big firm by the political authorities (ibid., p. 64).

Very well, but does this vision of dominant firms, growth poles and agglomeration constitute a theory? The reader might once again be left with the feeling of getting something less than he was promised. Perroux was dogged by such perceptions throughout his career, notwithstanding his ever more emphatic dissent: "contrary to hasty and superficial statements, it can be said that the pole of development is situated within an already articulated and coherent general theory" (1988b, p. 54). Benjamin Higgins (1988, 32) leaves no doubt that Perroux was highly respected by many of his peers, and notes that he was nominated several times for the Nobel prize. Higgins also (ibid., p. 46) cites H. W. Spiegel's assessment of him as "the only living economist who developed a theoretical system rivaling conventional equilibrium analysis." Yet Higgins and Spiegel's assessments do not represent a clear consensus. There are others who would agree with Mark Blaug (1964, p. 563): "unfortunately, the theory is unsatisfactory... being in principle non-falsifiable: it is simply a slogan masquerading as a theory."

The debate will not be settled here. Whether penetrating theory or pretentious slogan, Perroux's work on regional agglomeration can be characterized as emphasizing the role of pecuniary externalities generated by

the activities of dominant units, as well as asymmetries of power among units. The sociological nature of the work lies primarily in the latter facet.

III

Myrdal

UPON AWARDING GUNNAR MYRDAL (1898-1987) the 1974 Nobel Prize for Economic Science jointly with Friedrich von Hayek, the Royal Swedish Academy of Sciences referred to three of his works: The Political Element in Economic Theory (1954 [1932]), An American Dilemma (1944), and Asian Drama (1968). [11] The books, regarding respectively the value premises of economic theory, poverty among black Americans, and underdevelopment in south Asian countries, are more closely related than their titles and their disparate dates of publication would seem to indicate. Like Perroux, Myrdal persisted throughout his career in criticizing mainstream economic thought and developing a theoretical concept that could not be exposited within the mainstream. Also like Perroux he applied his concept to numerous areas of study, of which spatial agglomeration was just one, and he did so in a manner that reached beyond economics into sociology and the study of institutions. Of the three books cited by the Nobel committee, The Political Ele ment expresses most comprehensively Myrdal's critique of neoclassical economics, while American Dilemma and Asian Drama represent two applications of his theoretical concept.