Progress in the Theory of Economic Progress

Extract

The problem of economic development was among the main preoccupations of the classical economists; and Karl Marx, Max Weber, and their followers continued to be interested in it. The Anglo-Saxon economists and their followers, however, during the century preceding the Second World War, all but forgot about economic development—perhaps because they took it for granted. The growth of most of the advanced economies was impressive enough to be taken for granted; as for the underdeveloped areas, next to nothing was known about their rates of growth, although economists (at least in the advanced countries) seem to have supposed that the magnitude of capital exports to these areas gave them a chance to develop even faster than, and ultimately to catch up with, the more highly developed Western economies. Only England's development received some attention and mild doubts were occasionally raised as to whether her rate of economic growth was as fast as it could and should have been. From the turn of the century onward, blue books and white papers appeared, uneasily comparing British with German and American industrial production, questioning the wisdom of exporting quite so much capital, stressing the need for more aggressive export drives—but next to nothing was done about all this. For one thing, the philosophy of laisser faire still ruled supreme; for another, business fluctuations obscured and rendered difficult a true assessment of the situation; for a third, Britain's continued political supremacy may have lulled concern over the deterioration of her relative economic position. The problem of development came to the forefront of economic discussion only with the Second World War, as a result of two important changes. In the West, political power shifted across the Atlantic; in the East, Russia's war record established her both as an important center of political attraction and as a shining example of the success of planned industrialization and development.