Theories of economic development and growth.

295 Pages·2013·10.3 MB·English

NO. 17
General Editor
PROFESSOR
BRIAN CHAPMAN
M.,4,., D.PIIIL. (Oxon)
Theories of Economic Development and Growth
Milltroa Series
;I:. INTERNATIONAL INSTITU1'IONS by P?ro fessor Palll Reuler
~::I~~~~~~~~~ ~~:;=oW. ft~~~~!iu~~,~cott
4. MODERN FORMS OF GOVERNMENT: A Comparative Silldy by
The Rt. Hon. Michad Slewarl, M.P.
5. THE USE OF ECONOMIC STATISTICS by Professor C. A. Blyth
6. THE SOVIET ECONOMY by Professor Alex Nove
7. BRITISH i'OREIGN' l'OI.ICY: The Process of Readjustment 1945'
1961 by F. S. Norihedge
8. PUBLIC FINANCE AND BUrlGETARY POI.lCY by Alall Il'illinmJ
9. MACRO-ECONOMICS bv F. S. Bmol1/a1l
10. INTRODUCTION TO TilE SOCIAl. SCIENC:[S by Professor Alnllrire
Dllverger. '/'ra'lSlnted by M. Alldersoll
11. TRANSPORT AND PUBLIC POLlC\' 11)' Professor K. Al. Gwilliam
11. INFLATION AND TIlE TliEORY 01'-MONEY bv Professor R. J. Bnll
'3. REAJ)INGS FRml LIBERAl. WRITERS by JollII P/nmcI/ail.
'4, SHORT IIISTORY OF I'OST·W.'R RUSSr., by R 11'. Pethybridge
'5. TIlE WORKS OF JOSEPII DE MAISTRE Edited by Jack Livel),
16. PLANNING AND GROWTH IN RICII ANIl I'OOR COl'NTRIF.S Fdited
by Waiter Birmillgham
I j. THEORIES OF ECONO!lHC llEvEI.OI'MtXr ANIl GROWTH by 1'. S.
Brenner
18. SAMPLING: AN INTRODlJC':TION fo·OM. SOCIAl. SCIENCES Iry Fur/a
Conway .
19. THE SCIENCE OF SOCI",,"\': ..11/ 1"lro(/lIelioll 10 SocioIOl{)' h~·
Professor Sll'plICI/ Cotsgrove
THE BRITIStl SYSTEM OF GO\'F.RNM£Sr by ProfeJsor A. H.
Bireh
COMPAR.4.TlVE sorHL AIIMINISTRATION' /,..,. Rnrbnrn N. Rodl{en
with John Greve and J. S. Morgan .
22. INTRODucnON TO ECONOMIC ANAI.YSIS by Miles Flcmi"g
13. CONSTITVTlONAL BVREAUCR.'CY: A IIISTORY hy Hem:; P(lrri.1
In Preparation
SOCIOLOGICAL THEORY by Proles.mr T. B. Bol/omor('
LABOUR ECONOMICS by Professor]. R. Crossley

FIRST PUaUSllED IN 1966
Sf,ooND IUI'RES!lIDN 1969
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aoltOUCII CRnN. KENT
PREFACE
This book is based on courses of lectures 10 university
sludents in Ghana. The lectures were welcomed and I am
encouraged to hope that the book. will be useful to student!
elsewhere.
I found that my students had unusual difficulty with the
theories of the Neoclassical economists and conscquc=ntly
expanded my treatment at this point to ensure understand·
ing. Those already familiar with the Neoclassical school
may therefore yield 10 the temptation to skip some pages.
VB.

CONTENTS
Early Theories
11 The Classical Ecorlom;sls 27
III The Dialectical Materialists 76
IV The Neoclassical Economists IOj
The Theories of the Stages 0/ Economic
Growth IjO
VI Contemporary Theories -a survey liS
VII The Suu;et Theories 223
VIII The Theory of Growth and the Under-
developed Countries Today 248
28,

CHAPTER I
Early Theories
TnE MERCANTILISTS
We begin with the age of mercantilism. It was during this
period that the 'theological mould' which had shaped the
world of the Middle Ages was breaking up. Reason was taking
the place of revelation and the criterion of institutions became
expediency rather than religious authority. Religion ceased to
be the master·interest of mankindl and although an objective
and passionless economic science developed more slowly than
the corresponding movement in the theory of the state,
elements of a theory of economic growth were already discern
ible in early mercantilist writings.
Mercantilism, originally a tern of opprobrium and lacking
a clearly defined meaning. came in time to be understood as
the expression of a striving after economic power for political
purposes.' Mercantilist statesmen wanted to use the resources
of a unified State 'for strengthening the power of the same in
its competition with other states. While the medieval concep
tion of the object of human effort was the salvation of human
souls and while economic liberalism. or iauJe% fa ire, aimed at
the temporal welfare of individuals, mercantilist statesmen
and writers saw in the subjects of the state means to an end.
and the end was the power of the state itself'.' Therefore the
mercantilist ideas about economic growth were always con
cerned with aggregates and ignored the possibility that indivi-
1 For 11 good and detailed study of this transition lee R, H, Tawney RtlisJ'on
and tIN Ris, of Copit(llism, 1926,
I W. CunninghlUlt, Th4 Gnn"th 0/ E1I61irh InJ!IJtry and Co",m~u. 1910.
s For 11 gencl"Il diseu58ion of the term M~rcsntiliam see EIi, F. Hc:ducher
MerC:llntiJiam in the En()'clo~dio of Sod(ll Sdtln(II, 1962, Vol. 9/10,
THEORIES OF ECONOMIC DEVEl.OPME:'IIT AND GROWTH
dual and aggregate indicators may run contrary to each other.!
They never really bothered [0 analyse the relationship between
per-capita and total outpUt and implicitly believed that a
country's output was directly related to the size and degree of
employment of its labour force. This dual conrents of the
labour problem at times when reall and imaginary' fears of de
clining population wcre current and, when little increase in
per-capita output was c"ident,' dominated much of mercantilist
theory on economic growth. A further problem which received
no less attention was that of stimulating enterprise_ Mer
camilists bclic"en in universal egoism.6 Consequently, they
assumed that enterprise would best be served if emreprcneurs
were permitted to seek their private interest' while the Govcrn
mem merely acted as a correcti,'e agent for channelling 'private
benefit' to make it coincide wilh the advantage of the state.IO
They regarded the entrepreneur as the catalyst of cconomic
progress and wcre convinced that no effort should be spared to
assist him within the framework of the statc's pursuit of power.
\-Vhile labour and enterprise were vcr)' much in the foreground
oC mercantilist analysis land was relegated to a far less centra]
position. It was treated like an indirect determinant of trade
rather than an independent economic factor. The price of
land, the purpose, way, and extent to which it was used were
• T. Hobbea appear. 10 be an exception in this respect. See Lwwthan,
Ch.spten 11-13. More recendy a well known American expressed this good
meraantililt idea when he llated that 'Wh.st ia good for Generat Motora i.
good for the V.S.'
• E. H_ Phelpl Brown & Sheila V. Hopkins, 'Seven Centuries of Building
Wages' Economka, 1955; 'Seven Centuries of Prices of COll8umablea com
pared with builders' wage-fD,te$,' Economka, 1956; & 'Wage-rates and Pricet:
Evidence of PopUlation Pres.ure in the Si.J:teenth Century.' &onomka, 1957.
Y. S. Brenner, 'The Inflation of Prices in Early Sixteenth Century
England' £(orwmk HisUJry Rwit:U·. XIV, 1961, pp. 232-34. & 'The InRation
of Prices in England 1551-1650.' Ecfmomk History Rt'tJiftll XV, 1962, p. 284.
• M. M. Poetan & \'\,'. C, ScovitJe, 'The Spread of Teehniquea' Journal of
EcOJJtntlic Histwy. (Supplement) XI, 1951, pp. 339-60.
7 F. J. Fi8her, 'The Dark Agea of Economic History', F.(onomka, 1957.
Phelpl Brown & Sheila V. Hopkins Gp. nI" 1957.
I See F_ B. Kaye, Ma"deville. Thi! Fable of thi! BUI, 1924, for the lome
sentiment eJ:preased in the writings of Hohbe., Locke, EnumUI, Spinoza,
La Rochefoucauld, PRliC8l and othen.
• J. Vinef, Studies in the TherJ"Y of Internotionol Trade, 1937. John Holes'
'Diacoune of the Common 'Veal .. .' in R. I-I. Tawney & Eilecn Power Tudor
ECOMmit Donlmenu, 1924.
10 N. l\fachi8velli, Tlu Prinu, Ch. 15, 17, 21, and Disrourler. Ch. 2, 4, (I).
T. Hobbes, Leviathan, Part I.
'2