lecture one, development

development concerns the question of how and why countries are able to manipulate their rates of economic growth. the rates of increase of your GDP.

we are concerned with factors that encourage or militate against ec. growth.

this is a very recent question, about 300 years old. the reason for this is that the fact of economic growth is similarly novel. the very idea of development is a recent one.

	0-1000	1000-1500	1540-1820	1820-1870	1870-1914
EUROPE	-0.1	0.3	0.4	1.65	2.1
JAPAN	-0.1	0.18	0.3	0.41	2.4
LATIN AMERICA	0.7	0.09	0.2	1.3	3.48
AFRICA	0.7	0.06	0.16	0.5	1.4

some common answers

1. growth comes about on account of natural propensities. if this is true, though, why did it take so long? the Smithian answer is that this is because of the presence of institutions. most commonly, this account indicts the State—which allegedly squelched economic initiative and investible funds. in early days, the culprits were the Absolutist state, guilds, what have you. eventually, though, you get the modern state – allowing people to truck, barter, exchange, etc. the implication is that the advent of economic growth did not require structural shifts, but just institutional shifts—a change in the political rules of the game.

2. there is a cultural change that happens. in the pre-modern era, people were geared towards leisure, community, etc; innovation and hard work were discouraged. there can be culturalist and materialist variations of this argument. modernization theory is an excellent example of this. a kind of socialization prevailed in 17^th/18^th century Europe that never unfolded elsewhere. the obvious conclusion of these arguments is that modern rates of growth presuppose a cultural transformation. this demands internally-driven change, or cultural transmission. but this was, either way, the central obstacle [Asian values at one time inhibited ec. growth; then they promoted economic growth]

3. the other argument is that development required a transformation of social structures. it demanded a certain form of economic behavior, but this was not plausible under certain circumstances. because the choices that are available to people vary, depending on the conditions that confront them, it required a certain set of conditions to prevail before the corollary form of economic behavior could be generalized. the causal weight of the argument is on the property of the structures, not on the nature of the individuals.

there are significant disagreements here, viz-a-viz the neoclassical and cultural schools.

the Smithian argument:

1. people have an interest in their material well-being; their level of economic welfare.
2. because they're interested in their well-being, they have a proclivity to exchange.
3. their proclivity to exchange leads to growth, when institutions are appropriate.

the Structuralist argument draws a wedge between point number 1 and points number 2 and 3. in between, there need to be antecedent structural shifts.

put differently

the Neoclassicals: interest in welfare (X) – > a certain economic strategy (proclivity to exchange) (Y) – > modern economic growth

Brenner: interest in welfare enhancement (X) –> a certain economic strategy (Y) (the nature of which dependent entirely on a mediating mechanism (Z)—namely, the economic structure within which people are located)

this is an extremely powerful structural argument. let's run through it, by way of the rules of reproduction.

FEUDALISM

PEASANTS

1. Possession of MoP (customary rights to the land, and some degree of control of their own labour-power) –> produce for themselves/don't have to produce for the market
2. As a result, markets are thin; there will be few supplies coming to them (this is also a result of low levels of agricultural productivity, and the underdevelopment of markets due to low levels of technology)
3. Because markets are thin, they are also unreliable.
4. Peasants, therefore, avoid markets. They don't tend to specialize/innovate.
5. This reinforces the thinness of markets.
6. This produces a 'safety first' strategy.

[Discussion about whether it's possible to game the 'thickness' of markets, by assuming highly developed productive forces, to make a logical peasant, in possession of access to the means of subsistence, forfeit the 'safety first' strategy. Consensus seems to be that logically this is possible, but that empirically it is extremely rare]

LORDS

1. Peasant possession implies the general unavailability of free labour.
2. Thus, peasants are economically independent of lords (meaning, peasants can survive without the lord; lord does not have recourse to peasant produce in the same way that a capitalist does)
3. Reliance on coercion, then, to extract the rent.
4. The rent, then, will be invested in the means of coercion.
5. This means that there will be fairly slow productivity growth (this will produce a limited market—maybe for cannons, guns, etc.)
6. Because there's slow growth in productivity, he needs to grow his peasant base – he needs to annex other lands (It is individually irrational for him to kick them off the land, given that he wouldn't have a labour force to work the land. There might be some space for technological improvement on the manorial land, but the bang-for-buck would have to be enormous, given the supervisory problems).

Two basic conclusions:

1. For the economic system to shift from slow-growth to high-growth requires deep and far-reaching structural changes.

2. These changes are going to be fraught with all sorts of conflicts. Peasants will undertake this shift willingly, only under very rare circumstances.

The history of late development is the history of States undertaking this challenge of structural changes. What late development is fundamentally about is the attempt, through conscious agency, to bring about the sorts of structural changes that will bring about self-sustaining growth. To bring about a structure of incentives that encourages virtuous growth.

- - - - -

(1) A consequence of Brenner's argument is that 'wage-labour' is not a necessary condition for captialism – it is dependence upon the market. When you have landlords who can revoke the rights of their tenants, you have an epochal shift (in terms of productivity) – tenants will have to specialize/innovate to survive. You will get a class of wage-labourers, eventually, as unsuccessful tenants are sacked for underperforming. Market dependence is the key causal mechanism in which we are interested in; not the existence of wage-labour.

(2) Argument about 'urban practices' filtering into the rest of the continent (so, from Italian renaissance cities) fails because it can't deal with the constraints of social-property relations. Had these practices not filtered through, England would still have had capitalism. You run the counterfactual the other way, and you wouldn't have had capitalism (The basic investible resources for capitalist growth in England actually come from within England – this is an established quantitative fact. Wasn't the slave trade, wasn't investment from Europe, etc.)

(3) Merchant capital, in Vol I, is a solvent (at times). In Vol III, it's the opposite.

(4) The real secret of primitive accumulation is not 'thrift', but dispossessing people of the means of production.