Hungarian contribution to world theories tends to get overlooked, even though the views of people like Lord Peter Thomas Bauer had a great impact on the way developing countries are perceived today. Bauer’s main argument throughout his career was that foreign aid hinders both personal and state development.
Lord Peter Thomas Bauer was born as Péter Tamás Bauer to a Jewish family in 1915 in Budapest, where he studied law and in 1934 eventually moved to Cambridge to pursue a different academic angle, economy. He was also a Fellow of the British Academy.
Lord Bauer was a development economist, with great interest in international development and foreign aid.
At the time when pro-aid was immensely popular, he was one of the few who opposed foreign aid,
reasoning that it is dangerous because it increases the government’s power, giving way to corruption.
Bauer had a strong stance on the detrimental effects on state-controlled foreign aid that had the aim of helping developing countries advance: in his opinion, an aid-based theory is fundamentally inconsistent with reality.
When criticising foreign aid, Bauer drew on personal experiences which he gained as a colonial officer in Malaysia and Nigeria. Having experienced first-hand the harmful effects of support, Bauer drew the conclusion in his essay Dissent on Development that
central planning, foreign aid, price controls and protectionism do nothing but strengthen poverty and reduce individual freedom.
Aid further interferes with state, economic and individual development as only a chosen few got the money. Because of this, only a particular group of people could advance in life in developing countries.
So what did positive, beneficial development embody for him? Lord Bauer believed that development should lie in the expansion of individual choices and thus aiding individual freedom and that development can be useful only if the limited government’s role is to protect life, liberty and property.
Even though Bauer was friends with Margaret Thatcher, for whom she had a special admiration, his view on foreign aid was overlooked for decades,
especially during the time of the state-led socialist government agenda. However, it did not take many years for the world to acknowledge his theories and opinions, as in 1997 finally, the World Bank praised his contribution to the discussion on aid and referred to his views in their 1997 World Development Report.