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.

Imperialism and the rise and decline of the British Economy 1688-1989, O'Brien

(49): four stages

1. 1688 to 1846, First Ind Rev, Mercantilism and Imperialism
2. 1846 to 1914, W. Hegemon and Guardian of 'Liberal' Ec. Order
3. 1913 to 1945, 'neo-mercantile' period of intensified competition
4. 1945 to today, decline

(50): 1688 marks discontinuity, as Britain starts to get more involved in G. Power politics

(51): taxes to national income at 18%, in 1815; only 3% during reign of James II; enormous rise in national debt, to 60% of revenues after defeat of Napoleon

(51): 1688 to 1915, only 1/3rd of years were peaceful in Europe

(52): in 1688, ratio of exports to GDP was 8%

(53-54): in sum--trade was growing, but was it important in the mercantile period to England's growth? debate among historians. negative cas is that (1) proportions were too low; (2) commerce's growth was endogenously determined; (3) gains from trade were small, even if positive. [O'Brien begs to differ, re: this period--for him, imperialism was important, though the case is not uncontested--basically takes recourse in an evasion, see p. 56]

(57): consistently high levels of investment in Navy/State [proves what, exactly?]

(58): as 'safety valve' for migration [but in all of this, there is no real proof advanced for the significance of mercantilism.]

(59): again, summarizing his case against the 'endogenous' case, re: development between 1688 and 1815. counter-factual w/o imperialism seems implausible, to him. 


(61): citing Smith as suggesting that imperial commerce made possible a more extensive division of labour (40 to 50% of non-ag workforce produced for markets overseas!) [hmm]

(62): in short, taking a middling position--against liberal histoiography that imperialism has no place. not wanting to be the world-systems fools, either.

(63): in short, for 1846-1914 period, reproducing argument of nineteenth-century radicals that, once Britain was powerful, it had no need for empire--costs outweighed benefits. some groups, of course, did benefit--subgroups.

(64): proportion of trade on imperial markets declined, in this period. almost everything supplied by imperial markets could have been purchased elsewhere.

(64-65): finds c-factual, in this era, plausible. 1.1 percent hit to GDP in 1870; 2.6% in 1913.

(66): citing Hobsbawm, 'imperial status' was a cushion for decline. a cushion for which taxpayers were paying a high premium.

(67): export of capital? but most went to white dominions (65%). and something like 2/3 of all assets were purchase of governemtn bonds and stable securities.

(70-73): imp--England could have adjusted better to 2nd Ind Rev, w/o Empire (domestic investment, banking system, etc.)

(73-75): imp--Empire implied a high taxation burden on domestic population

(77): and, as Germany was emerging as rival, Britain was unable to adjust the various burdens to compete better

path dependency, or why Britain became an industrialized and urbanized economy long before France, O'Brien (1996)

(213): std. of living before the Great War were probably not that far apart, actually

(214, see 242 also): argument: difference was a function of (1) geographical endowments, and (2) a system of property rights inherited from feudal past [either an alternative to or a misspecification of the Brenner thesis--or, an attempt to answer to questions the Brenner thesis begs?]

(215): importance of agriculture is three-fold (lists four, but 1 and 3 are the same)

1. supports growth of populations off of the land (and releasing labour and capital)
2. supplying them with food and RM
3. acting as a home market for manufactured goods, urban services

(216-217): land productivity comparable or higher in France between 1700 and 1910 (which was a function of intensification of labour inputs--i.e., not welfare enhancing!); but labour productivity far superior in England 

(219): imp-- it was not so much 'innovation', in this period (1500-1800), as it was the application of already-existing 'know-how'. rudimentary practices to store and accumulate nitrogen. [this is a very important point, as regards the Brenner thesis]

(222): availability of animals per capita was very important--progressive agrarian regions were most distinguished by this. (this becomes an 'endowment', that's important to the question at-hand)

(223-224): hints toward a 'geographic explanation'[but low bar, here, since it's just a two-country comparison]--availability of fodder crops, and less need for investment in inter-regional transport

(224-225): in sum--importance of animals, providing energy, fertilizer, etc., all raising yields and releasing labour.

(226): key--institutions of developing capitalist agriculture in Britain just wouldn't retain as much redundant labour--peasantry evolved into wage-dependent agricultural labour force well before 1800, which is very different from the rest of Europe

(228-229): key--revolutionary agrarian reforms, in France, helped secure peasantry in its place; 1800s was a century of challenge, which they met by selling below market prices, exploiting family labour, etc (self-exploitation)

(230): key--peasants stayed peasants because they wanted to minimize risks, maintain access to land. avoid uncertainty of proletarian life.

(232-233): referencing Bloch, here, arguing that reforms of 1789 were illustrative of general peasant strength, in Fr., to maintain access to land; very different from what's true, in Britain (good stats on how this translated into tenant farmer dominance, in Eng., but p-proprietor dominance, in Fr.)

(236): at beginning of 1600s, about 1/3rd of English farms were capitalist, another 1/3rd both family and hired labour. 45% of farms were removed from open fields.

(237): imp, waves of enclosure: between 1450 and 1525, in check till 1660, and then 1660-1815 [contradicts thesis that increasing enclosures were key to p. resistance in ECW, see JPS readings]

(239): there's a feedback loop, here, too: food prices went up as peasants migrated to cities, prompting further consolidation of capitalist farming in countryside, further migration of peasantry, etc.

(241): in sum, 'going back to the land' gives us as persuasive account of economic develoment as any (though concession that it's not reducible to agrarian fundamentals)

agricultural productivity and european industrialization, 1890-1980, o'brien (1992)

(514): ag. is important because successful early industrialization has been closely associated with improvements in productivity in land

(515-526): extensive discussion of measurement techniques

(526): disputing Bairoch's argument that protectionism in late 19th C. helped European Ec. (it depends on correlations), but no evidence for counter-argument offered

(529-530): key--no Eu economy had gone as far as Britain in 'freeing up' a labour force for industrialization, which was a function of the lower level of productivity (per worker) in agriculture. productivity per hectare was of course not the issue; UK hardly topped, on that count.

(531): US, also, was very impressive

(534): in claim that Medit. economies remain behind, hinting at 'ecological' explanation of backwardness

historical roots of mass poverty in SA, tapan rayachaudhuri (1985)

(801): phenomenon of large groups of half-starving people (underdevelopment) is not a holdover from pre-modern times. this, in India, is traceable to new institutional arrangements in Ag. starting in 1813.

(801): output of foodgrains per head of pop declined, as cashcrops were promoted

(801): moreover, this was an already established fact by the time that populations started to increase

(802): according to Kuznets, income per head in traditional societies in Asia was probably higher than in pre-industrial phase of Europe

(802): citing evidence of 'very high' both land and labour yields in pre-industrial agrarian India [hmm]

(802): Greater Bengal had been free from recurrent famines, 1570-1770

(802-803): level of revenue demand had been kept in check by labour shortages in Mughal period (oppressed peasants could 'vote with their feet']

(803): not a 'uniformly immiserated peasantry'

(803): there were no 'absolute' shortages of food in pre-colonial India [i.e., per capita grain availability]

(804): those with no rights to land were and are likely to suffer, but in pre-colonial India this was a small portion of the pop--nowhere near 45%

(804-805): 1813 as key turning point, w/ end of Company's monopoly [but evidence adduced here is weak]

(805): key--colonial government introduced tenurial systems which gave proprietary rights to about 4% of population dependent on agriculture (identical with old class that had 'superior rights' in land, but it eliminated the 'usufractory right of other agricultural classes')

(805): details of p. capita growth; availability per capita of foodgrain declining in 20th C.

(806): as revenue came to be collected in cash, agricultural producer pressure to sell. conditions of selling were very unfavourable; monopsony in buyers, monopoly in suppliers.

intercontinental trade and the development of the third world since the industrial revolution, patrick o'brien (1997)

(76): productivity growth in Europe was 'endogenous' (citing A. Maddison)

(77): [1. GOODS] key--commerce in 'the Wallerstein period (1492-1789)' had more in common with a 'medieval' past--before 1846, export+import/production ratios were in the region of 1-2 percent. for Britain, Portugal, Holland, below 15%.

(77): before railways, most prices set locally, not influenced by long-distance trade.

(78): [2. CAPITAL] European money going abroad was a 'miniscule percentage' of world capital formation--persistent imperfections in international capital markets

(78): [3. LABOUR] numbers migrating in mercantile era were very small--most went close to place of birth

(79): wasn't until 1914, that overland transportation had competitive advantage over waterborne

(80): Treaty of Vienna allowed for 'peaceful' development of international commerce

(80, see 86): 1821-1921, 138 new colonies for Europe; by 1914, population of 530 million under their sway. nominally independent countries opened up (Ottoman, S Aerica, Arabia, Indian princely States, China, etc.)

(81): after 1815, a 'liberal' trade regime [very different from Bairoch's account, take note]

(81): trade grew at 4-5% in 1800s, after 1% in 1700s

(82): by 1913, ratio of exports+imports/income were about 30%; they were about 2-3% at beginning of 1800s.

(82): [1. GOODS, 1800s] key--main supplier region of RM for Europe was white settlement countries overseas; second was Europe's peripheries; third was Third World.

(83): [2. LABOUR, 1800s] between 1821 and 1915, 46 million people left native lands for overseas--most, though, were Europeans going to US (and they left, in the main, the poorer regions, especially in the latter half of this period)

(84): benefited both labour-surplus and labour-scarce regions--an equilibrium-restoring process, at a general level

(84): [3. CAPITAL, 1800s] as much as 30% of savings going overseas [!]. most financed regions of European settlement (see p. 91--$131 per capita in white settlement, $11 in Asia and Africa). [O'Brien has a very sanguine story about what happened when it went to Third World, but without that angle the point remains]

(86): in 1913, European countries included 11 times more land, 18 times more people in their colonies, than in their core

(86-92)): assessment of dev of und argument--(1) the share of European exports going to TW went from 15% in 1830, to only 21% in 1910 (a real increase of nineteen times, but not much in relative share; (2) the share of European imports coming from TW also negligible (details within)

(93): 1820-1910, terms of trade move in favour of the TW [read around here, some oversanguine conclusions]

(95): most 'gains' from export trade went to expat Europeans

(96-97): in sum--suggestion that not only did imperialism not explain development, it doesn't do much to explain underdevelopment (if it did, all it did was divert talents/energies!). underdevelopment, instead, is explained by antecedent factors--(1) initial factor endowments and (2) ability to attract European investment [this latter half will require response that does more than just use India as example, though that is important]

(98, see 104): imp--1913-1945 marks the Dark Age for Third World, b/c of wars and international depression [these are regarded, almost, as exogenous to the Era of Progress that preceded them]

(99): there were three trends, though, that exacerbated all this:

1. rising proportion of food satisfied by domestic production, b/c nations worried about self-sufficiency
2. substitution of synthetic materials depressed demand for natural RM
3. rise of NA as industrial power, and it used its own RM

(101, 102): 1910-1950, no increase in rail track per square mile in TW [this is the archetypal liberal account of 'gains from trade', but it isn't really stood on solid ground]

(105): in sum--TW not doing well, 1900-1950, in terms of manufacturing output, welfare, etc. [the implication, here, though is that TW intellectuals misunderstood the problem; it was a breakdown of trade that was responsible, not its continued operation--see p. 109 ('the North is responsible, but only for initiating wars that ruined commerce')]

(106-108): imp--many reasons to suspect that 'gains from trade' were likely weaker, in TW (b/c of expats, b/c of structure of plantations, etc.); but fair point that theoretical speculation needs to be backed by data, of which there isn't enough

(108): noting, though, that peasant mode of production isn't always superior, for development, to plantation mode

(114-115): TW share of global exports decreased from 40% after WWII to 22% in 1990s [though this is obviously symptomatic of deeper problems; not the problem, itself!]

(115-116): key--N-N trade represents about 60-65% of total trade, in post-WWII period; S-S trade is about 10%; S-N trade is about 30-40%

(118): oil price rise checked decline of TW exports as global proportion; and checked increasing proportion of manufactures in world trade. but these two trends stand out, when this is taken into account.

(121): tendency of net terms of trade is to move against primary products, in 20th C [but check against Bairoch]. this highlights necessity for developers to move into industrial goods.

(126): ends with banal call for end to protectionism.

kenya, what does dependency mean?, colin leys

(109): critique of kaplinsky. evidence points to fact of african capital's entry; kaplinsky denies this by asserting mitigating factors that, actually, match up with history of capitalist development more generally (hand of State, help of foreign capital, beginnings as petty capital, etc.)

(111, 112): citing Bill Warren's critique, in which it's asserted that dependency theorists rely on an 'idealized' model of capitalist development (in which there's no unevenness, no inequalities, no cycles). this is taken as evidence of inability to break out of underdevelopment [the strong version of this critique is of course nonsense]