Money, Banks and Finance in Economic Thought

Never the Twain Shall Meet: Tinbergen's institutional convergence theory

Dekker Erwin, Erasmus School of Economics

At the height of the Cold War Tinbergen launched with two of his students, the bold idea that institutionally the East and the West would converge. Much different than the convergence associated with the Solow-model, the imagined convergence would not be in growth rates, but rather in the decision-structures within the political economy. Tinbergen expected that where the West was slowly moving to a more centralized decision-structure, the East would slowly move to a decentralized decision-structure. For Tinbergen this point of convergence would represent the optimal economic order. This paper will first situate the thesis, first proposed in 1961, in the political-economic situation of its time. The search for convergence and the attempt to bridge East and West, as well as the attempt to overcome the dichotomy between capitalism and socialism are contextualized. Secondly it will use the convergence thesis to highlight some central elements in the work of Tinbergen: the emphasis on the institutional features of the economy, the globalist attitude underlying it and the bridge-building character of much of it. Thirdly it studies the reception and the further development of the thesis in both the East, among others by Leontieff, and the West and the way in which this shaped Tinbergen’s commitment to the convergence thesis during the remaining 30 years of the Cold War, up to the moment that Gorbachev pays him a personal visit to thank him for the intellectual inspiration. The paper is a chapter from the intellectual biography of Jan Tinbergen on which I am currently working. His Nobel Prize will be 50 years old in 2019.

Area:

Keywords: Tinbergen; Cold War; convergence: centralization; decentralization

Paper file