Sachs Delivers Brody Lecture on Economics

Jeffrey D. Sachs, director of the Harvard Institute for International Development and Professor of International Trade at Harvard University, delivered the Alexander Brody Distinguished Service Lecture in Economics at Weissberg Commons on Tuesday night, February 17, 1998. The New York Times Sunday Magazine called Mr. Sachs "probably the most important economist in the world," and the sparse crowd of thirty faculty members, students, and guests was therefore quite surprising.

Sachs’ topic was "Fostering the Rule of Law in Transition Economics." He has traveled around the world advising governments on how to change their economies from Socialist to market structures. Sachs argued that not only is there a need for a new economic framework in these countries, there is also a need for the Rule of Law, which he defined as the framework for politics and power where state and executive authority live within and are restrained by the law. Factors affecting implementation of the Rule of Law include history of the particular society, the country’s geographic location, economic policy, national resources, and the culture and character of the country. "One interpretation may seem odd but key," Sachs explained, "and that is the role of geography in any economy, and therefore, its reaction to the Rule of Law."

Dr. Sachs stressed the importance of international trade in any market economy. He noted the importance of a coastline to cheaply transport goods. An example of the effect a coast can have on an economy, Sachs contended, is evidenced in the difference between Bolivia and Chile. While Bolivia has no coastline, Chile enjoys quite an expansive one. This allows Chile access to port cities with a gateway to the Pacific Ocean, while Bolivia is a landlocked country with no such access. Even if the same exact economic policies are put into effect in the two countries, the results will be vastly different.

Another example given by Sachs was that of Poland and Russia. He enumerated the problems that each country faces based on their respective geographic locations and histories. While Poland enjoys a long coastline, it was unable to utilize it for many years as it was mired in the conflicts of Germany and Russia - two nations that have spent much of the last hundred years fighting with each other. This all changed, however, in 1989 with the fall of the Berlin Wall and the subsequent end to Communism. Due its close proximity to Western Europe, Poland has been able to utilize its ports, and in fact has become the fastest-growing county in all of Europe.

Interestingly enough, Sachs commented, Russia has experienced great difficulty even though it has virtually the same economic policies as Poland. Although most of the cities across Europe were built with interregional and international trade in mind, Russia's cities were built as fortresses for the czars. As Sachs put it, "Russia’s inward-oriented economy largely cut it off from international, and even inter-regional trade."

Dr. Sachs showed charts and statistics demonstrating the lawlessness and illegal economic activity in Russia and suggesting the difficulty in fostering the Rule of Law in a country that had become accustomed to a totalitarian system. The same principle holds true for other transition economies.

Although few attended the lecture, those in attendance seemed to enjoy it immensely. Dr. Ross Zucker, Professor of Political Science, commented that "Dr. Sachs levied great importance on the role of the state in the development of post-Communist states and the fact that they have been very much underestimated in their attempts to foster the Rule of Law." Students also derived pleasure from the lecture, including Kenneth Sicklick, YC ‘00, who exclaimed, "It was very interesting to hear exactly how the former Communist countries stunted their past and future economic growth."