Peter Bauer, powerful economic analyst with controversial views
Peter Bauer, who has died at the age of 86 only days before he was due to collect a $500,000 prize in recognition of his achievements, roused controversy among post-war economists as the leading critic of foreign aid for poor countries.
In 1983, when he retired after 23 years as Professor of Economics at the London School of Economics, his long intellectual assault on "aid", which he came to stigmatise more precisely as "government-to-government transfers", appeared to have made little impact on public policy in the west.
Yet a decade - and many billions of dollars - later, his brave stand was largely vindicated. Today, even in plush international agencies, few would defend the post-war religion of foreign aid as the panacea for economic backwardness.
Lord Bauer was to have flown to Washington this week to receive the inaugural Milton Friedman prize for advancing liberty from the free market Cato Institute. The award, which will now go to his estate, was some measure of how far his views had come to prevail after so long in the wilderness. Yet he had always been associated with meticulous economic analysis of markets, population, immigration, investment and other aspects of economic development.
Peter Thomas Bauer's non-conformity may owe something to his origins in Hungary, where he was born in 1915. His father, a successful bookmaker, was advised by a client that a good start in life for his industrious son would be a degree from a British university. Despite having embarked on studies for a career in law at Budapest, young Bauer set out for Cambridge. Without introductions or connections, he called during the prescribed hours upon the senior tutors of six colleges, from five of which he received provisional acceptances, including Gonville and Caius, where he enrolled as an undergraduate later in 1934.
From "not having read a book on economics or economic history" on arrival at Cambridge, he graduated three years later with first class honours in economics.
After graduating in 1937, Bauer returned to Hungary to complete his law degree and discharge his obligation for national service with the Hungarian army. But before the war, he resolved to settle in England and in 1939 joined Guthrie & Co, the far-eastern merchant and rubber grower, returning to Cambridge at weekends to supervise students at his old college.
His academic career of 40 years started in 1943 as research fellow at London University where he studied the rubber industry in Malaya, and became reader in agricultural economics in 1947. In 1948 he moved back to Cambridge as university lecturer in economics and in 1956 Smuts reader in Commonwealth studies.
His first book, The Rubber Industry, published in 1948, was based on over four years' study, partly in Malaya, for his fellowship dissertation. Ever after, he was to draw large lessons from the evidence that peasant proprietors, who routinely planted and tended rubber trees for harvesting six years later, were capable of taking a longer view than politicians looking to the next by-election.
A further five years of study led to publication of West African Trade in 1954. His visits to Nigeria and the Gold Coast, now Ghana, enabled him to develop his skill of close observation, which illuminated the role of traders in the finance and development of extensive plantations of cocoa, groundnuts, cotton and kola on farms established, owned and operated by Africans.
The experience gave him confidence to challenge the widely accepted orthodoxy that economic development required a pervasive role for government bolstered by official "aid". In place of corrupting "aid", he deployed the heretical idea that open markets were central to development.
By the 1960s and 70s, Bauer had emerged as almost a lone voice in predicting the certain failure of the high hopes western governments and international agencies reposed in "foreign aid" as the solution to poverty.
Once he got into his stride, he loved to shock his listeners by declaring that just as natural resources were not essential for a country's economic progress, nor was external investment, nor even a large population. Indeed, the only pre-condition was individual freedom reinforced by security for person and property.
Elevated to the House of Lords by Margaret Thatcher in 1982, he devoted his maiden speech to denouncing the damage and dependency caused by the post-war welfare state in Britain. He was immediately followed by fellow-Hungarian Lord Kaldor, who had acquired a reputation as an incurable statist and was hard put to discharge the traditional function of congratulating the newcomer and expressing the hope that the House could often hear him speak in the future.
Of life in the Lords, he said with some justification: "The few people who listen to me think I'm either a harmless lunatic or a dangerous one." He sadly concluded that the level of debates was "rather disappointing, considering the eminence of many people and our assured tenure, which should make for greater independence of thought and speech".
Here we may see the deficiency in his personality that discouraged the formation of the Bauer school of thought that his powerful analysis could have justified. Although not without admirers among the fair sex, he never married and displayed the scholarly strengths as well as the social weakness of the old-fashioned dons who prefer the ivory tower even to the bar at the House of Lords.
Lord Harris of High Cross is the founder president of the Institute of Economics Affairs