I. M. D. Little

I M D (Ian) Little, who died on 13th July 2012 at the age of 93, was an outstanding figure in world economics in the later 20th century. His influence on economic affairs was wide-ranging, profound, and — last but far from least, and not to be taken for granted — unfailingly positive. Above all, he gave a new direction to development economics, focusing on exploitation of trade opportunities and correction of distorted price structures, rather than state controls and planning.

Academic prowess was not in his family’s tradition. On his father’s side his antecedents were cavalry officers (over two generations commanding the 9th Lancers). His mother was the granddaughter of a Victorian railway entrepreneur, Thomas Brassey, whose legacy included the country estate in Northamptonshire where Little passed his childhood as the youngest of six. After Eton, his undergraduate years at New College, Oxford, were interrupted by RAF service in World War II, as a test pilot for rotary-wing aircraft (the first helicopters, and their ancestor the autogyro). He was awarded the AFC and rose to the rank of squadron leader.

He returned to Oxford in 1945, aged nearly 27, a changed person — apart, that is, from his continuing skill at bridge and other competitive card games. Previously a playboy undergraduate, he now and for the next 60 years showed himself to be intellectually brilliant, sharply focused on academic investigation, and a workaholic.

In 1947 he gained a First in Philosophy, Politics and Economics (largely omitting the Politics, by virtue of the special dispensation for wartime degrees). In 1948 he was elected Fellow of All Souls by examination, and in 1949 was awarded the DPhil. His dissertation, published in the following year as A Critique of Welfare Economics, earned him an immediate reputation as an economic theorist, and by the standards of doctoral monographs became a best-seller. Its central insight was that the ranking of society-wide economic alternatives cannot dispense with value-judgements concerning the distribution of wealth and income. There followed several other works on welfare, notably ‘Direct versus Indirect Taxes’ (Economic Journal, 1951), a classic refutation of the supposed classic case for direct taxation (which overlooks the trade-off between earnings and leisure).

Oxford remained Little’s base for the next 25 years, as his professional contributions multiplied and he acquired the status of a leading development economist. Yet the path was not as simple or direct as that. Exploratory restlessness led him to a varied succession of appointments and projects, as he sought to apply his economic understanding in different contexts and not allow specialism to shut out other interests.

From All Souls he was appointed in 1950 to a Fellowship at Trinity College, moving two years later to Nuffield College, which offered greater flexibility for outside engagements, and involved no obligation to teach undergraduates. In 1953-55 he was on secondment in HM Treasury as Deputy Director (to Sir Robert Hall) of the Economic Section, his one spell of UK Government service. The experience confirmed his interest and stimulated his versatility in applied questions of economic management and policy. Subsequent work on UK macroeconomic issues included the chapter on fiscal policy in Worswick and Ady (eds), The British Economy in the 1950s (Little had covered the same topic in their earlier volume on the years 1945-50); a long Memorandum of Evidence, jointly with R R Neild and C R Ross, to the 1958 Radcliffe Committee on Monetary Policy; and booklets with J S Flemming on the case for a wealth tax (Methuen, 1974), and with W M Corden and M FG Scott on the choice between devaluation and import controls in Britain (Trade Policy Research Centre, London, 1974 and 1980).

On the microeconomic side Little, together with Richard Evely, directed for the NIESR in the later 1950s a large-scale study of Britain’s industrial structure, published in 1960 under the title Concentration in British Industry (Cambridge UP). Far more eye-catching, and mind-bending, were his article ‘Higgledy-Piggledy Growth’ (Bulletin of the Oxford University Institute of Economics and Statistics, 1962) and its book-length sequel a few years later with A C Rayner, Higgledy-Piggledy Growth Again (Blackwell 1966). This work stemmed, characteristically, from Little’s responsibility for the financial investment policy of Nuffield College, in conjunction with its broker Ralph Vickers. Little showed ‘that it was useless to try to predict future corporate profits from any single past earnings growth ratio, or from dividend cover, or from asset size…It caused a sensation in the world of investment that is hard to overstate, and, even fifty years later, it remains deservedly influential.’ The words are those of Professor Colin Leach, reproaching the Times obituarist (3rd August and 6th August 2012) for neglecting the item.

Little’s introduction to development economics came with his joining the MIT India Project in 1958-59. This was thanks to Paul Rosenstein-Rodan, with whom Little had recently collaborated on an investigation of nuclear energy possibilities in Italy. Received wisdom was that market forces had failed the less-developed world, whose efforts to catch up must accordingly be based on centralised investment planning and trade restrictions, supplemented by foreign aid. Little had no initial reason to dissent. He wrote two books on the role of aid (Aid to Africa, Overseas Development Institute 1964; and with J M Clifford, International Aid, Allen and Unwin 1965), and had no time for sceptics such as Peter (later Lord) Bauer.

Two things changed his mind. One was an insight, gleaned during his second India visit in 1965, into the poor returns and other failings of India’s public investments. The other was awareness of the early successes of export-led growth in the ‘Asian Tigers’ (Hong Kong, Singapore, and especially South Korea and Taiwan). These real -world out-turns encouraged a re-examination of basic principles. The corollary was, in Little’s perception, that developing countries should drop inward-looking policies, liberalise trade, and align their domestic pricing and incentive systems with external opportunity costs through the application as appropriate of taxes and subsidies and the use of shadow prices in cost-benefit estimations. The new approach was elaborated by Little and colleagues (he being an inspirational team leader and not merely the senior author) chiefly in two publications of the OECD Development Centre: Manual of Industrial Project Analysis in Developing Countries, II, Social Cost-Benefit Analysis (1969) with J A Mirrlees (and its revised version of 1974, entitled Project Appraisal and Planning for Developing Countries); and Industry and Trade in Some Developing Countries (1970), with M FG Scott and T Scitovsky.

These works ushered in a new era of economic thought and achievement in developing countries, including the largest of them (China and India), and embracing also relevant international institutions such as the World Bank. It will be for future economic historians to assess just how much the ‘Little Revolution’ contributed to — as opposed to merely explaining — the spectacular advance of per capita incomes in these countries over the past 40 years.

Little himself certainly did not rest on any laurels. From 1970 to 1975 he held a statutory Chair at Oxford — Professorship of the Economics of Underdeveloped Countries, as it was still called (having not long before discarded a reference to the Colonies) — which he resigned on appointment to a medium-term position at the World Bank. From 1978 he was self-employed or ostensibly retired. During the last quarter of the 20th century he in fact produced ten books, wholly or mostly on development issues. Four were single-author volumes, another four jointly authored (two of them with V R Joshi on India’s macroeconomic policies over a near-forty-year span) and two others co-edited. Nor did he stop there. His last two books were, respectively, a review of principles of public policy entitled Ethics, Economics and Politics (OUP 2002), and an engaging autobiography, more personal than professional, entitled (naturally) Little by Little (privately printed, 2004).

He was elected FBA in 1973 and appointed CBE in 1997, an absurd under-recognition of his achievements when one recalls — to take just one example — that every outside member of the Bank of England Monetary Policy Committee is routinely made a CBE. For that matter, he could be said, by comparison with some of its recipients, to look distinctly overqualified for the Nobel Prize in Economics. Little himself, happily, was the last person to be troubled by such considerations.

Peter Oppenheimer
Christ Church, Oxford

From issue no. 159, October 2012, pp.18-19

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