Mihail Manoilescu – Beyond Taboos and Clichés Reassessing a legacy in economic theory and policy
Outside Brazil and Romania, Mihail Manoilescu is essentially a forgotten economist, and, even in the latter, when his name is mentioned he is generally taught as a trade or protectionist theorist, although he is a development, growth, trade and industrial planning theorist rolled into one. In the end, he was essentially an implicit macroeconomic theorist at a time when macroeconomics was just being established. What little was assimilated from him by post-war Anglo-Saxon economics happened indirectly and almost by chance, through out-of-the-Paul Samuelson-mainstream economists who – maybe because of his tainted ideological stands, or because of Romania’s fall into obscurity after the establishment of the communist regime – rarely mentioned his name, such as Paul Rosenstein-Rodan’s theory of development traps or Ráoul Prebisch’s theory of commodity dependency cycles, despite the fact that in the 1930s he commanded enormous intellectual and policy influence. Back then, he was as a sort of intellectual icon for the Geneva institutions’ group of less developed economies – the League of Nations’ nascent IMF/World Bank/WTO of the era – against the political economy orthodoxy of the day as well as a regular speaker at Davos-style conferences organised by the far right regimes of António de Oliveira Salazar, Benito Mussolini and also that of Adolf Hitler.
Keynes of the Poor
In the 1930s, Mihail Manoilescu commanded enormous intellectual and policy influence, being a sort of intellectual icon for the Geneva institutions’ group of less developed economies.
Although the connection is rarely made, his theory shares more in common with that of John Maynard Keynes than with previous protectionist thought. In Keynes’ macroeconomics, which applies to industrialised or developed economies, the classical theory of supply and demand equilibrium is refuted by the existence of unutilised resources, of poverty amid plenty. In Manoilescu’s theory, a protectionist big push industrialisation program which breaks away from apparent constraints such as comparative advantage is predicated on the basis of the existence of underutilised resources, of plenty amid poverty. While Keynes had to tackle the problem of mass unemployment in industrialised societies, Manoilescu was focusing on mass underemployment in agrarian societies, which was also becoming a political risk with growing education and expectations (in fact, the right-wing extremist movement in Romania that Manoilescu catered to in the later part of his career was at its core a revolt of the first generation of college educated peasantry, an outgrowth of the rural-urban divide rather than of an urban-urban divide, corresponding perfectly to what Samuel Huntington will later define, without ever referring to Romania, as simultaneous “red-green revolutions” in changing societies). Trade was more essential to Manoilescu than for Keynes, because for a predominantly agrarian economy – especially one suffering from war inflation, like that of Britain, but which was also robbed of its gold reserves – commodity exports to industrial economies were essential to keeping monetary stability. It must not be forgotten that, at the peak of his influence, Manoilescu was – if not a monetary theorist working for the British colonial administration in India like Keynes – at least a monetary practitioner, as governor of the National Bank of Romania. In an economy where imports consisted mainly of industrial goods, either for capital investment or for Veblen-style conspicuous consumption of the wealthy class, the demand and price volatility of agricultural commodities in the importing industrial countries negatively impacted the monetary stability of the exporting country. Consequently, industrialisation through import substitution and protectionism as promoted by Manoilescu’s theory had not only a growth and development dimension, but also a monetary one.
Free Trade in Decline
Although the connection is rarely made, his theory shares more in common with that of Keynes than with previous protectionist thought.
Manoilescu’s interest in industrialisation and tariffs as a mean to achieve it is not original. After the Cobden-Chevallier era of free trade agreements in the middle of the 19th century, Europe was moving towards tariff policies well before the beginning of World War One. Although not officially independent until 1877, the Romanian Principalities, then the United Romanian Principalities and then simply the Principality of Romania not only took part, albeit often ex officio, in the Manchesterian free-trade wave, but were actually a sort of cradle of laissez-faire policy, so much so that to this day some historians talk about a great experiment of modernity first applied in these lands. Being officially vassal states of the Ottoman Empire, but under the shared protection of the Great Powers of the era, and after 1859 practically independent, the policy of unrestricted free trade in the Romanian lands was not only convenient for the rival Powers but, at least in this period of national statehood formation, also for the Romanian elites, who internalized it after the 1828 dismantling of the Ottoman trade monopoly and also saw it as a security guarantee, especially given the growing importance of the Danube shipping lane, which gave birth to the first permanent international institution – the Danube Commission. Thus, the first and only Prince-ruler of the United Principalities of Romania, Alexandru Ioan Cuza, could declare in Parliament in virtual complete harmony with both the 1848 Liberals and the Conservative opposition that the country opposes all protectionist regimes, since the real economic policy battle of the time was the redistribution of land ownership. However, in the decades after the country gained independence and proclaimed itself a kingdom, all over Europe the free trade ideology reached its zenith and began losing ground. In Romania, this turn in policy – from a free trade regime towards moderate protection – started with the 1886 general tariff law, renewed and enhanced by the Costinescu general tariff law of 1906. This established policy, along with his Saint-Simonian formation, turned Manoilescu into one of the leading promoters of industrialisation in the country – a neoliberal (sic!), in the political vocabulary of the time, meaning a liberal who believed in using the state to achieve economic progress, as opposed to old liberals who still clung to free trade and a relatively non-interventionist policy, which in interwar Romania ended up siding with the National Peasant Party instead of the Liberal one. This was the case of Gheorghe Tașcă, Manoilescu’s most serious critic in Romania. In his view, and that of other National Peasant Party economists such as Virgil Madgearu, a policy of protectionism to accelerate industrialisation would be detrimental to the agrarian population and will prevent or retard the sector’s modernisation because farmers would have to pay a higher cost for acquiring tools.
Trade War with Austro-Hungary
The 19th century established infant industry protection policy, along with his Saint-Simonian formation, made Manoilescu one of the leading promoters of industrialisation in the country – a neoliberal (sic!), in the political vocabulary of the time, meaning a liberal who believed in using the state to achieve economic progress, as opposed to old liberals like his greatest critic Gheorghe Tașcă.
The 1886 tariffs were the result of a protracted trade war with Austro-Hungary after the signing of a Free Trade Convention in 1876 regarding the movement of livestock. Although the agreement reduced tariffs and had a mutual free transit clause, it did not contain non-tariff regulations such as veterinary regulations and the Vienna authorities used this deficiency to ban Romanian livestock exports, decimating the industry and helping convert the Romanian agricultural sector from a livestock exporting one to a grain producing one. But the 1886 tariffs were also predicated on the now rather mainstream infant industry argument of creating a market for domestic industrial production. According to the Friedrich List-style infant industry argument, tariffs were still a sunk cost to consumers – but a sunk cost temporarily necessary to get a business or an industry started where there was none in the face of devastating, not always fair, competition. In short, the infant industry tariff argument was that without it there would not be a market sufficient in size to make the building of a factory more profitable than importing the industrial goods, but once the factory is up and running, in other words the industry matures, the tariff – which basically covered the cost of the fix investment in the new capacity – is no longer necessary and the consumer goods produced can thereafter be even less expensive than the imported ones. So short term protection imposes a short term cost to the consumer for a long term national benefit – in the long run, as it were, it should pay for itself.
In line with infant industry and nascent developmentalist policy, the 1886 and 1906 general tariffs were not crude protectionist measures. They incorporated exemptions for the importation of machinery and other capital goods necessary to invest in national productive facilities and they were accompanied by laws facilitating access to credit, another issue in less developed economies, to would-be entrepreneurs, which however could be abused and create a corrupt, clientelistic relation between politics, bureaucracy and business, which sometimes feels to have never left Romania. This set of industry promoting trade, tax and credit policies, already in place since the late 19th century, forms the background of Manoilescu’s theory. But his theory, although it can be viewed as a systematization of established Romanian – Liberal Party in particular – policy in the early 20th century, goes beyond the previous protectionist arguments in some important ways.
Vintilă Brătianu’s Program
The 1886 tariffs were the result of a protracted trade war with Austro-Hungary after the signing of a Free Trade Convention in 1876 regarding the movement of livestock.
The most influential economic policymaker in early 20th century Romania was Vintilă Brătianu, of the Brătianu family which virtually chaired in succession the National Liberal Party from its establishment and until the 1930s. He is the author of the Liberal economic program whose electoral motto captured its essentials with elegant and lasting concision “Through Ourselves”. Whilst Manoilescu was a low level civil servant, whose family background was linked to the socialist movement which in 1899 joined the National Liberty Party as an autonomous faction, Vintilă Brătianu was the political and financially well connected man in charge of developing Romania’s industry. An agrarian country, by the share of the population’s occupation and national output, Romania was also a rich natural resource country, especially in the natural resources then at the cutting edge of industrial development like oil. The Liberal Party’s motto pertained first and foremost to a debate regarding how best to promote the development of these resources. The Conservative Party – soon to be replaced, with the 1917 introduction of universal male suffrage, by the National Peasant Party as the second largest party – was more inclined to a laissez-faire policy, as the 1895 Mining Law compromise shows, which in the program of the National Peasant Party became known as the “Open Doors Policy”. This meant allowing unbridled foreign investment, since it suited the interest of their export-oriented agrarian constituency, while the Liberals promoted a series of tax and regulatory policies (capital ownership quotas, management nationality representation quotas etc), which culminated with a 1923 constitutional article establishing public ownership of underground resources, designed to enact an important role for the Romanian government as well as promote an important role for Romanian business ownership of the resource exploitation industry.
The most influential economic policymaker in early 20th century Romania was Vintilă Brătianu, the author of the Liberal economic program whose electoral motto captured its essentials with elegant and lasting concision “Through Ourselves”.
Manoilescu’s theory is as much the product of Liberal economic thinking and policies of the time as it is the product of indigenous Socialist debates. The main Socialist theoretician in late 19th century Romania, a country which featured a Fourrier-style phalanstery community as early as 1830s, was a man called Constantin Dobrogeanu-Gherea, one of the founders of the Democratic Socialist Workers’ Party of Romania (1893), whose great originality was that he noticed that the orthodox Marxist economic theory did not quite fit the facts of countries like Romania, because instead of a great oppressed proletariat like in Germany, one could find a great oppressed peasantry whose class-consciousness worked differently from that of the workers (David Mitrany, the Romanian born mid-20th century British theoretician of international relations will later write that the existence of this large peasantry, endowed with land ownership, in countries like Romania, or Poland for that matter, was precisely what made the Bolshevik Revolution unappealing there). Manoilescu’s focus on labour-value aggregate product and its distribution, although filtered through David Ricardo, can be traced back to these Romanian Socialist and Left-Liberal debates regarding the peasantry. The climax was reached in the decade after the 1907 peasant uprising against landlords who often leased their estates to entrepreneurial managers, which in many parts of the country had to be repressed by the military. The Romanian peasantry set the countryside on fire, brought down a Conservative government, a still unsettled number estimated in the thousands died and the turmoil made it into the world’s headline news. With Mihail Manoilescu’s generation, it will enter economic theory.
The post-1918 Romania significantly increased the scope of the National-Liberal Party’s policy of industrial development. Although the country more than doubled in size, it was still an agrarian country. The unification integrated some a little more industrialised Austro-Hungarian-ruled provinces as well as a virtually industry-less formerly Russian-ruled province, leaving the country, on the whole, the same as before. However, its economic potential and ambitions were much higher.
International Economic Disorder
Manoilescu develops his theory in this post-war Romanian context, marked by the high ambitions of the National-Liberal economic program and the economic imbalances of the war economy, namely inflation, currency depreciation, debt and more closed economies.
Manoilescu’s focus on labour-value aggregate product and its distribution, although filtered through David Ricardo, can be traced back to these Romanian Socialist and Left-Liberal debates regarding the peasantry.
The international economic debates at the time in official forums focused on re-establishing the pre-war monetary stability, an effort in which Romania – a member of the Latin Union gold bloc – joins in, although with most of its gold reserves confiscated by Soviet Russia, after having been sent there for safekeeping in 1917, when Germany and its allies overran more than half the country, it never really manages to establish pre-war parity and devalues its currency several times. The second big topic was the reestablishment of trade and capital flows in the post-war context, which in practice is intimately linked with the first issue. The most ambitious proposals in this regard, today viewed as ancestors of the European Union, called for a Europe wide free-trade area or even a Europe wide customs union. The area of the former Habsburg or Austro-Hungarian Empire, which partly also covers the Kingdom of Romanian, is most often given as an example in these proposals of the pernicious economic effects of national fragmentation, while prominent Austrian economists, working either inside or outside the League of Nations’ bureaus, such as Gottfried Haberler or Fritz Machlup, will lay the basis of modern economic integration theory. But no state was actually willing to dismantle altogether the many controls, regulations and restrictions put in place during the war and which now served various constituencies.
On the sidelines of these two main issues, a third major economic debate ensues in Geneva, where the League of Nations offices were located, which pitched the interests of the developed or industrialised countries and those of the agrarian or the less developed economies, which were represented mainly by the countries of Central and Eastern Europe and those of Latin America, although Southern European countries were also involved, against one another regarding unfair terms of trade. The issue will be compounded over the interwar years by the unstable mix of policies in the industrialised countries, where orthodox insistence on gold-standard fixed exchange rates and free flow of capital of the late 19th century style was cohabitating with a patchwork system of growing controls, trade restrictions and colonial preferences, making it hard for commodity exporting countries to preserve their macroeconomic stability. These are the circumstances in which Manoilescu’s theory gains international prominence. It promised developing countries a way to take control of their economic destiny and the hope of closing the gap with developed economies or at least become more self-reliant. The fact that it captured the increasingly inward-looking and nationalist feeling all over the place in the years before and after the Great Depression was part of its appeal and constitutes even today a remarkable intellectual testimony essential for understanding that troubled period.
The comparative advantage argument assumes a simple two goods, two prices model, while Manoilescu’s generalised argument reveals a two goods, four prices model, in which pursuing the conventional comparative advantage prescription is a suboptimal solution.
Manoilescu’s theory starts with an empirical set of observations. Agricultural goods, but also commodities in general, command a lower value per unit of hour worked than industrial goods, since a higher output involves higher average costs or lower average revenue. This simple observation is generalized into what became known as the Manoilescu constant or the Manoilescu ratio: the productivity of industry is always higher than the productivity of agriculture. Consequently, a policy of industrialisation is justified on economic grounds. A quasi-autarkic protectionist policy as a means to achieve industrialisation is not nonsense, since the opportunity cost of the tariffs is not the foregone consumer surplus as in the orthodox theory, but the foregone value-added output created by the existence of the tariff. The comparative advantage argument assumes a simple two goods, two prices model, while Manoilescu’s generalised argument reveals a two goods, four prices model, in which pursuing the conventional comparative advantage prescription is a suboptimal solution. As in Keynes’ macroeconomics, the hidden premise of the argument was the existence of underdeveloped, more than underutilised, resources, such as human capital, know-how and savings. This was not always the case, although since the 1860s Romania had a host of educational policies, which included mandatory elementary education, good secondary schools in cities, literacy and popular culture programs in rural areas as well as a privately or publicly Western-educated elite which by the interwar years was reproducing itself and maintaining a small but lively university, cultural and scientific life at comparable standards, of which Manoilescu (and many other personalities) was a product of.
The reconstructed GDP series for the era show a meagre, almost flat, per capita growth rate over the period, with large deviations from the mean, which makes it very difficult to assess the endogenous effect of policy, but the relative change in its composition is not disputed.
Although Manoilescu’s autarkic program was never consistently applied in Romania, the more unsystematic National-Liberal “Through Ourselves” program, from which it drew inspiration for his abstract model, was the dominant policy in the interwar years with the exception of the ill-timed National-Peasant government’s change in policy, when in the midst of the Great Depression, with protectionism rampant all over the world, Romania actually attempted its “Open Doors” liberalisation program. And despite the many critiques that can be formulated against this protectionist industrial development policy during this troubled and complicated period, the fact is that by 1938 industry, services and construction surpassed the 50% mark in national output. In about three decades, marked by a costly war and a world depression, the country transformed itself from an essentially agrarian country, with basically a railroad-to-harbour economy, to an agro-industrial country, with some surprising cutting-edge industries and industrial products such as the much admired and feared, indigenously produced and destroyed by the Soviets to its last piece, IAR-80 fighter plane. True, the reconstructed GDP series for the era show a meagre, almost flat, per capita growth rate over the period, with large deviations from the mean, which makes it very difficult to assess the endogenous effect of policy, but the relative change in its composition is not disputed.
Manoilescu himself was a controversial, pompous and somewhat eccentric figure even in his own time, although he remains the most influential – mostly forgotten and discredited – economist Romania produced so far. He morphed from being a boring brilliant engineer, intellectual and high civil servant to being a not always successful political schemer, influencer and political figure, never actually with a huge following of his own.
Although he started out as a sort of Vintilă Brătianu neoliberal, working for the first post-World War One Liberal government, he disdained like many intellectuals of his time – especially one coming from countryside boyars in southern Lowlands Moldova – the so-called Liberal oligarchy organised around the Brătianu family and entered politics alongside the Liberal Party’s biggest rival in the early 1920s, the People’s Party formed by the retired war-time hero Marshall Alexandru Averescu.
Like a number of Romanian – and European intellectuals in general – he soon developed sympathies and admiration for the Mussolini regime, which he theorised at length in his own original way. He considered it inspirational for its apparent efficiency in tackling the challenges and overcoming the contradictions of modern economies and society, a logical next step in the history of political and social organization. And – as the political economist Philippe C. Schmitter has shown – parts of his Corporatist ideas have endured to this day, although in a democratic form, in the many bodies bringing together government officials, business owners and workers unions that exist all over Europe and constitute a distinguishing mark of late 20th century continental capitalism.
Parts of his Corporatist ideas have endured to this day, although in a democratic form, in the many bodies bringing together government officials, business owners and workers unions that exist all over Europe and constitute a distinguishing mark of late 20th century continental capitalism.
In 1930 he supported the return of Prince Carol (the future King Carol II) to the throne, with whom he was personally acquainted since his school years and who was disowned in 1926, during the Liberal government of Ionel Brătianu. This got him a short-lived political career with the National Peasant Party, the party-in-government at the time, which under the leadership of Iuliu Maniu practically allowed what became known as “the restauration”, from where he left after a row with Virgil Madgearu, the Peasant Party’s main economist. For a time in the early 1930s, he was considered a member of the King Carol II’s close circle of collaborators, the camarilla as it was known by its critics. The two did not get along for long, however. As Governor of the Romanian National Bank in 1931, he refused to bailout a very important, flagship, Romanian bank of the era – Marmorosch, Blank & Co Bank –, which, according to the political gossip and the speculation of the feverish press of the day, put him at odds with King Carol or the King’s other friends’ supposed interests in the affair.
In any case, Manoilescu moved more towards the far right, started his own insignificant Corporatist Party or League and in the late 1930s he became a sponsor of the extreme right-wing Legionnaire movement, just when King Carol II was starting to repress it in force. In 1940, when the Schmittian regime of King Carol II was crumbling, he was nevertheless given the scapegoat role of negotiating with Bulgaria the Mussolini-Hitler orchestrated so-called Vienna Arbitrage, officially intent on revising the much touted injustices of the Versailles Peace in South-Eastern Europe, which led to the loss of two seaside Romanian counties. The vain Manoilescu fulfilled the job in the even more vain hope of preventing a much bigger territorial loss towards Hungary in parallel diktat-negotiations. Like other expert high civil servants, he continued to work in this capacity during the regime of General Ion Antonescu, although his handling of the country’s existential crisis in the summer of 1940 with the consequent territorial losses on all three fronts damaged his reputation even with the short-lived pro-Nazi Legionnaire coalition partners of Antonescu’s military regime.
When Romania broke away from its alliance with Germany and practically the Soviet occupation began – which first moved significant industrial equipment, sometimes even entire plants, and then extracted important quantities of natural resources (ranging from grain and oil to uranium) from the country as war reparations through a series of joint companies for about a decade – he was among the first group of politicians and high-ranking officials to be arrested. He managed to write his Memoires during a short period of release, before being imprisoned by the puppet Romanian Communist regime installed by the Soviets at the infamous Sighet Jail, where he will perish several years later, without a trial and buried in an unmarked grave, like many other political figures of the era of varying persuasions.
Forgotten and Remembered
Manoilescu’s greatest intellectual legacy today is to be found outside Romania, in Brazil in particular, although his unofficial operative influence is much greater. His theory of import-substitution industrial development, based on the pre-World War Two Romanian experience, was actually mainstream policy all over the developing world in the 1950s and the 1960s and parallels the more successful East Asian export-promotion industrialisation.
Manoilescu’s greatest intellectual legacy today is to be found outside Romania, in Brazil in particular, where the Getúlio Vargas regime of the late 1930s adopted his ideas as official economic policy, although his unofficial operative influence, which would be highly interesting to research systematically, is much larger and can be detected in a range of countries beyond Latin America, from postcolonial India to, in a sense, contemporary Chinese economic policy. His theory of import-substitution industrial development, based on the pre-World War Two Romanian experience, was actually mainstream policy all over the developing world in the 1950s and the 1960s and parallels the more successful Japanese and more generally East Asian export-promotion industrialisation policy, particularly in the post-World War Two era. Today he is essentially unknown in places such as the United States or Britain where people would expect to find all the wisdom of economics readably available, forgotten in France and Germany where he published his main works, while in Brazil he is still taught in economics departments and constitutes a household name among intellectuals and economic policymakers. In Romania, he seems on the surface of things almost as forgotten as everywhere else besides Brazil; there are no books published about him or his ideas, only scattered information here and there, and very few academics, practically none of note, who actually claim to continue or engage his intellectual legacy; but the vestiges of his life and thought are still here and inevitably resurface from time to time, usually with some controversy regarding his anti-Semitism such as when the National Bank of Romania issued a collectors’ coin in April 2016 featuring Mihail Manoilescu’s effigy, as part of a series commemorating its past governors.
The most notable such reappearance took place during Nicolae Ceaușescu’s Communist regime and practically all the knowledge and uses that currently exist in Romania regarding Manoilescu’s theory date back to this period. After refusing to take part in – and even publicly condemning – the 1968 Warsaw Pact invasion of Czechoslovakia, Ceaușescu sought to distance Communist Romania from Moscow’s hegemony. Internally, this meant above all a policy of cultural de-sovietisation and rehabilitation of national values, which actually began timidly under his predecessor, Gheorghe Gheorghiu-Dej, soon after the successful negotiation of the retreat of Soviet troops from Romanian territory in 1958, but without any real in-depth reforms of the communist system as such.
Manoilescu’s main book was reprinted there in 1986, at a time when the regime was however embarked on an autarkic policy that was extremely costly socially.
Externally, it inaugurated a period of multilateral diplomacy, also initiated by Dej with an equidistant declaration regarding the Sino-Soviet leadership conflict within the Communist Bloc, which included among other things the exceptional accession of Communist Romania to the IMF and The World Bank in 1972, with the status of developing country – the same group of countries as that covering South America, which cherished and made great use of Manoilescu’s ideas in the United Nations’ Economic Commission for Latin America, an organisation which finally fulfilled a 1939 initiative first formulated at the League of Nations in Geneva.
The distancing from Moscow and the opening up of Communist Romania to the West and the wider world in the late 1960s and the 1970s gave Ceaușescu’s regime access to dollar credit, technology transfers and overseas markets to pursue an ambitious industrialisation program. Although the regime never abandoned Soviet-style central planning and references, the cultural de-sovietisation along with Western and Third World economic engagement allowed for and, in fact, made necessary, the recovery of some key economic ideas and practices that guided Romania’s pre-communist economic policy and thinking. Already, in 1965, even before Ceaușescu assumed succession, the Romanian communist regime mobilized to reject a Soviet economist’s proposal – the so-called Emil Valev Plan – for the COMECOM economic integration of Eastern Europe and the Soviet Union, based on the principle of production specialization, that would have turned almost half of post-World War Two Romania into an agricultural hinterland of Moscow. The man assigned to intellectually demolish the Valev Plan by the Romanian Politbureau was Costin Murgescu, an economic historian with a Legionnaire-turned-Communist youthful ideological past. In 1967, he will also be entrusted with directing a new economic research institute directly subordinated to the Ministry of Foreign Trade and International Cooperation, soon to be known as The Institute for World Economy, where most of the economic thinking for the later part of the Communist period was done and where most of the high ranking civil servants that continue to occupy important decision-making positions to this today, were trained.
Manoilescu’s main book was reprinted there in 1986, at a time when the regime was however embarked on an autarkic policy that was extremely costly from a social standpoint. The 1970s oil shock and the fall of the Shah’s regime in Iran, with whom Communist Romania maintained good relations; the rise of interest rates on its dollar liabilities, when Paul Volcker began to rein in inflation; the loss of American goodwill towards Ceaușescu’s regime created during Henry Kissinger’s diplomatic manoeuvres to end the Vietnam war and the subsequent détente, due to his underwhelming human rights record; and the increased competition from rising, cheap and innovative, exporting East Asian countries on Third World markets – all combined by the early the 1980s in forcing the Romanian Communist regime to pursue what today would be called an extreme austerity policy. Unlike in capitalist economies, austerity – meaning cutting back on current government spending to repay or rein in incurred debt expenses – did not meant unemployment and bankruptcies, but chronic shortages of goods and a deterioration of their quality. Nevertheless, the march towards industrialisation – inspired by Marxist-Leninist dogma, but now augmented with some of Manoilescu’s and other pre-communist considerations – was not abandoned. On the contrary. The new policy presupposed not only the forced liquidation of rural settlements and the building of lavish civic centres, but after paying for all the dollar debt acquired during the détente period it meant pursuing a mostly planned policy of crediting Third World countries for Romanian imports (although even today there are reportedly some Ceausescu era unpaid debt in the state’s financial records from countries like Libya, Cuba, Vietnam and so on). This consumer shortage economy is what many think ultimately brought the downfall of Ceausescu’s regime, while the financial independence from both Soviet and Western money is what some think retarded the post-1989 transition to market economy in the country compared to its North-Western neighbours. This economic failure of the Romanian transition can be measured pretty straightforwardly: from a virtually equal, or in fact 4.76% higher, GDP per capita level in 1989 compared to that of Poland, the country was in 2017 around 12.97% below it, according to current World Bank statistics.
Elephant in the Room
The rather populist calls for the protection of Romanian capital and for a New National Industrial Policy, made in crescendo over the last seven years by the Social Democratic Party, often joined by the National-Liberal Party, or independent factions of it currently sharing government power, rarely or never directly refer to the pre-Communist National-Liberal program of industrial development, to Manoilescu’s work or to the Communist regime’s use of some of its applications in its international affairs, although there is an eerie similarity at play. However, many of the people making these arguments at present are actually former students and young faculty who read and edited him in the 1970s, 1980s and even early 1990s and who should be all too aware of Romania’s economic history, since they are in part and to some extent its last protagonists. Thus, Cristian Socol, the main advocate of a New National Industrial Policy, does not mention either Manoilescu or the rudiments of industrial planning done in his time, shortly before and during the Second World War, which involved another notable Romanian economist named Nicolae Georgescu-Roegen, preferring instead to advertise his policy advice with the more prestigious French and Dutch post-War World Two experiences, or at best with a passing reference to the later Brazilian developments of his ideas, although knowledgeable observers can easily read between the lines.
The populist calls for the protection of Romanian capital and for a New National Industrial Policy, made over the last seven years, rarely or never directly refer to the pre-Communist National-Liberal program of industrial development, to Manoilescu’s work or to the Communist regime’s use of some of its applications in its international affairs, although there is an eerie similarity at play.
And it does not help at all that the recently renamed National Commission of Strategy and Prognosis, which is supposed to fulfil the indicative planning and forecasting roles of equivalent institutions founded by Jean Monnet and Jan Tinbergen in the heydays of strategic planning, has been staffed by the current Social Democratic government of Viorica Dăncilă with a committee of former members of the Communist-era Council of State Planning, an institution of a very different sort, whose planning was imperative, substituting the market not complementing or orienting it. The Communist-era intellectual freeze, followed by a dysfunctional and rather disappointing transition, prevented significant development – and for a long time even acknowledgement – of the theory, or pretty much of any theory, in Romania, but very few of that generation would really critically dispute its legacy. In a country without a historically strong entrepreneurial capitalist class and culture, statism and dirigism tend to be, by default, the preferred economic ideology of the elites, despite rather limited post-Communist flirtations, by circumstance and necessity, with free market ideology.
Economic theory and policy has enriched itself in the meantime even when it comes to industrial development policy, offering rather orthodox rationales based on coordination failures, informational problems and agglomeration economies for government tinkering with market outcomes, whilst Romania’s adhesion to the European Union – which, at its core, consists of a custom union and a common market – makes the Manoilescu-type emphasis on tariffs and restrictions to foreign direct investment as policy instruments quite problematic to pursue at the national level, at least under current international engagements, underscoring the limitations of past experience.
True, the 1990s and 2000s pro-market consensus in economic policymaking, which disavowed direct government involvement in industry as prone to a host of inefficiencies and ascribed for it only an auxiliary role as insurer of fair competition, corrector of externalities and provider of public goods and services, such as high quality education, has been challenged in the post-2008 recession political environment all over Europe and North America, with French officials calling for a Europeanization of its traditional policy of subsidising “national industrial champions” and the Trump administration’s sensational relapse into an old American tradition of tariff policy, following complaints of deindustrialisation and unfair competition from emerging economies such as China. But, in a country undergoing a decline in the rule of law and a partisan assault on fragile, still maturing, independent institutions – which in modern development economics have become an essential ingredient for growth – such calls for more government direction and involvement in the economy spell more fear than hope.
 In the sense that Luiz Carlos Bresser-Pereira, one of the latter-day Brazilian continuators of Manoilescu’s theory, talks of Developmentalism Macroeconomics.
 The Nobel-prize winning Portuguese novelist José Saramago describes the excitement produced by the Romanian economist at one such event in his novel The Year of Death of Ricardo Reis, which may give the reader a clue as to why Manoilescu’s theories were embraced and developed most in Brazil.
 Manoilescu’s book of political theory-cum-political economy, The Century of Corporatism (1936), was rather jealously endorsed by the Italian Fascist leader as the faithful description of Fascist Italy’s political economy.
 Manoilescu collaborated with and published in the journal of the Kiel Institute für Weltwirtschaft, Germany’s leading international economics research institution and the world’s oldest. Ráoul Prebisch read his work from there.
 The new or neoliberals vs. the old liberals divide in early 20th century Romania – which is marked by Ștefan Zeletin’s book, Neoliberalism (1927) – was not a divide between biological generations, since Mihail Manoilescu and Gheorghe Tașcă, for instance, are basically of the same age and even come from the same county, but more of a divide between two generations of leadership at the helm of the National Liberal Party at the turn of the century. In any case, Zeletin gives a Romanian account for the visible transition all over continental Europe, and later in Britain too, from a laissez-faire liberal ideology to a more protectionist and interventionist one.
 In the case of Romania, for instance, the ratio between the value of a metric ton of export and the value of a metric ton of imports falls from a range of 0.20-0.35 between 1901 and 1915 to a range of 0.06-0.19 between 1919 and 1937, v. Andrei, Tudorel (ed.), România, un secol de istorie: date statistice, Editura Institutului Național de Statistică, București, 2018, p. 407.
 Thus, for instance, the literacy rate, despite persistent regional disparities, jumped from 19.6% of the population in 1899 to 61.8% in 1930. Only 1.1% of the population (1.4% male, 0.6% female) had a university education that same year.
 According to the Economic Survey of Europe, published in Geneva in 1949, in 1938 the share of industry in Romania’s national income was 16.9%, that of services 39%, construction 5.6%, and agriculture 38.4%. The net value of Romanian industrial output was calculated at 253 million dollars at 1938 prices.
 Both Axenciuc (2012) and Maddison (2018) historical data series. V. also Voinea, Liviu (ed.), Un veac de sinceritate. Recuperarea memoriei pierdute a economiei românești 1918-2018, Editura Publica, Bucureşti, 2018.
 Council for Mutual Economic Assistance, the economic organisation of the Eastern Bloc, founded by the USSR in 1949 as a response to the American Marshall Plan and latter Western European initiatives.
 Both figures are in USD current prices, as found in World Bank national accounts data and OECD National Accounts data files.