Volume 43, Number 168,
January-March 2012
Back to Development
Jaime Ornelas
DEVELOPMENT: INITIAL IDEAS ( ...continuation )

Another neoclassical economist, Lauchlin Currie, summarized what appeared to him to be the various ways in which development can be studied, all of them linked to growth, without considering aspects of distribution, accepting in the conclusion that the central focus of his work was to find out how to accelerate growth. On this matter Currie says:

It is possible to study the problem of development from various aspects. The first is to consider how and why growth begins. The second, which has occupied the economic historians, is to explain the degree of growth that has occurred— a historical and analytical exercise. A third, which has interested many writers, is to search for a consistent pattern of growth that will fit many diverse cases […] A fourth procedure is to inquire why growth has not proceeded more rapidly—that is, to carry out what I refer to here as the diagnosis of the problem. The fifth—and the main preoccupation of this book—is to consider how to accelerate the rate of growth (Currie 1966: 3).

As can be seen, the economists of the neoclassical style show that in general development is the result of a transformation process both of social relations of production and the way wealth is distributed, conditions that require and insist upon growing social participation, which is totally disregarded.

DEVELOPMENT AS MODERNIZATION:
ROSTOW AND THE STAGES OF DEVELOPMENT

Among the ideas put forward for development as modernization within the neoclassical frame, the work of the North American economist W.W.Rostow stands out. W.W Rostow published a book that in 1960 would mark intense debate on development in Latin America. The title of the book, The Stages of Economic Growth: A non-Communist Manifesto, clearly states its purpose and direction: to offer an alternative to development through capitalism to underdeveloped countries that might be attracted to socialism.

According to Rostow, underdevelopment is a stage that all nations in the world have passed through and the transition from underdevelopment to development can be described as a set of stages that all countries have passed through or should pass through. The point of departure is the traditional society, enabling development to begin following the same successive steps that permit western nations to reach the last stage: "society of mass consumption." 2

The history of all society Rostow maintains, unfolds in stages, and all nations on earth can be found at one of the following five stages:

  1. Traditional society, whose structure is developed "within limited production functions (…) and on pre-Newtonian attitudes towards the physical world" (Rostow, [1960] 1990: 4) at this stage dominated by subsistence agriculture, the whole pre-Newtonian world can be grouped: "the dynasties of China; the civilization of the Middle East and the Mediterranean; the world of medieval Europe…" (Rostow, [1960] 1990: 5).
  2. The second stage with preconditions for take-off "embraces societies in the process of transition; that is, the period when the preconditions for take-off are developed" (Rostow, [1960] 1990: 6). Historically, the calm before the break-up of the Middle Ages created the preconditions for the initial impetus in Western Europe at the end of the 17th and 18th centuries, which gave this part of the world cultural and economic superiority above the rest. Of the European states, "Britain, favored by geography, natural resources, trading possibilities, social and political structure, was the first to develop fully the preconditions for take-off" (Rostow, [1960] 1990: 6).
  3. The take-off stage. This stage is marked by:

    The great watershed in the life of modern societies (…) Growth becomes its normal condition. Compound interest becomes built, as it were, into its habits and institutional structure (and) in such cases capital imports usually formed a high proportion of total investment (Rostow, [1960] 1990: 7).

    At this stage, an industrial sector acquires differential growth and drives the growth of the others, bringing into the equation the social and political institutions that adjust to the new level of development. Industrialization provokes mass migration of agricultural workers to industry, from the countryside to the city and the significance of this is that economic activity and the population is concentrated in only some parts of the country. The investment level reaches 10% of gdp.

  4. Rostow calls the fourth stage the drive to maturity and this is characterized by a "long interval of sustained if fluctuating progress" supported by the spread of modern technology as part of economic activity as a whole. Technological innovation encourages productive activity to diversify and opportunity for investment is increased whereby "some 10-20% of the national income is steadily invested, permitting output regularly to outstrip the increase in population" (Rostow, [1960] 1990: 9). At this stage the economy finds a place in the international arena and goods previously imported are now produced internally.
  5. The fifth stage, finally, is the age of high mass-consumption in which, "in time, the leading sectors shift towards durable consumers' goods and services" (Rostow, [1960] 1990: 10). The United States reaches the culminating point of this stage in 1913 with Henry Ford’s moving assembly line and " in the 1950's Western Europe and Japan appear to have fully entered this phase" (Rostow, [1960] 1990: 11).

2 A distant reference to the "theory" of development of societies in stages is found in Friedrich List, the German economist who in 1840 published his book National System of Political Economy, in which he writes: "As respects their economy, nations have to pass through the following stages of development: original barbarism, pastoral condition, agricultural condition, agricultural-manufacturing condition, and agricultural-manufacturing-commercial condition." (List, [1841] 1909:II.XV.12). Further on, List explains how development must progress, appealing to the intervention of the state: "History teaches us how nations which have been endowed by Nature with all resources which are requisite for the attainment of the highest grade of wealth and power, may and must—without on that account forfeiting the end in view—modify their systems according to the measure of their own progress: in the first stage, adopting free trade with more advanced nations as a means of raising themselves from a state of barbarism, and of making advances in agriculture; in the second stage, promoting the growth of manufactures, fisheries, navigation and foreign trade" (List, [1841] 1909: I.X.26).

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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