Political Econ of Growth. Paul A. Baran
also here the thought of history, and an examination of the circumstances that have brought about the present burst of interest in social and economic change may shed valuable light on the nature and significance of the current debate, as well as on the substance of the problem itself.
It will be recalled that a strong interest in economic development is by no means an unprecedented novelty in the realm of political economy. In fact, economic growth was the central theme of classical economics. This much is indicated by the title and contents of Adam Smith’s pathbreaking work, and many a generation of economic thinkers, regardless of the names that they gave their writings, were concerned with analyzing the forces that made for economic progress. Their concern with the conditions necessary for economic development grew out of their keen observation and study of the society in which they lived, and resulted in their firm conviction that the political, social, and economic relations prevailing at the time greatly impeded and retarded the development of productive resources. Whether they referred to the fallacies of the mercantilist foreign trade theory or to the rigidities of the guild system, or whether the issue was related to the functions of the state in economic life or to the role played by the landowning class, the classical economists had no trouble in showing that economic progress was predicated upon the removal of outdated political, social, and economic institutions, upon the creation of conditions of free competition under which individual enterprise and initiative would be given ample opportunity for unhampered performance.
Not that they confined themselves to a critique of the then existing society without making an attempt to provide a positive analysis of the working principles of the rising capitalist order. On the contrary, it was precisely this positive effort that furnished us with much of what we know today about the functioning of the capitalist system. What matters in the present context, however, is that the chief impetus to their prodigious scientific and publicistic endeavors was supplied by the strongly felt necessity to convince the public of the urgency of liberation from feudal and semi-feudal shackles. In this sense, if in no other, it is wholly appropriate to relate the classical school of economics to the rise and development of capitalism, to the triumph of the modern bourgeoisie. In the words of Professor Lionel Robbins:
The System of Economic Freedom was not just a detached recommendation not to interfere: It was an urgent demand that what were thought to be hampering and anti-social impediments should be removed and that the immense potential of free pioneering individual initiative should be released. And, of course, it was in this spirit that in the world of practice its proponents addressed themselves to agitation against the main forms of these impediments: against the privileges of regulated companies and corporations, against the law of apprenticeship, against restriction on movement, against restraints on importation. The sense of a crusade which emerged in the free trade movement is typical of the atmosphere of the general movement for freeing spontaneous enterprise and energies, of which, without doubt, the classical economists were the intellectual spear-head.1
Yet, as soon as capitalism became fully established, and the bourgeois social and economic order firmly entrenched, this order was “consciously or unconsciously” accepted as history’s “terminal station,” and the discussion of social and economic change all but ceased. Like the Boston lady who, in reply to an inquiry whether she had traveled much, observed that she had no need to travel since she had been fortunate enough to be born right in Boston, the neoclassical economists, in contrast to their classical predecessors, were much less concerned with problems of traveling and much more with the question how best to explore and to furnish the house in which they were born. To be sure, to some of them that house did not appear altogether perfect. They all thought of it, however, as sufficiently comfortable and sufficiently spacious to permit of various improvements. But such improvements—desirable as they may have seemed—were to be undertaken slowly, cautiously, and circumspectly, lest harm be done to the foundations and the pillars of the structure. Merely marginal adjustments were deemed practicable and advisable—nothing drastic, nothing radical could hope for approval on the part of economic science.2 Natura non facit saltum suggests clearly that no moving was contemplated; it is certainly not the motto of economic development.
For economic development implies precisely the opposite of what Marshall placed on the title page of his Principles. It implies the crude but crucial fact—often, if not always, overlooked—that economic development has historically always meant a far-reaching transformation of society’s economic, social, and political structure, of the dominant organization of production, distribution, and consumption. Economic development has always been propelled by classes and groups interested in a new economic and social order, has always been opposed and obstructed by those interested in the preservation of the status quo, rooted in and deriving innumerable benefits and habits of thought from the existing fabric of society, the prevailing mores, customs, and institutions. It has always been marked by more or less violent clashes, has proceeded by starts and spurts, suffered setbacks and gained new terrain—it has never been a smooth, harmonious process unfolding placidly over time and space.
However, this historical generalization—probably one of the best established that we have—was quickly lost sight of in bourgeois economics. In fact, having started as advocacy of capitalism, having grown to be its most sophisticated and perhaps most influential rationalization, it had to share the fate of all the other branches of bourgeois thought. As long as reason and the lessons to be learned from history were manifestly on the side of the bourgeoisie in its struggle against the obscurantist ideologies and institutions of feudalism, both reason and history were confidently invoked as the supreme arbiters in the fateful contest. There are no more magnificent witnesses to this grand alliance of the ascending bourgeoisie with reason and historical thinking than the great Encyclopedists of the eighteenth century, than the great realists of the nascent bourgeois literature.
But when reason and the study of history began revealing the irrationality, the limitations, and the merely transitory nature of the capitalist order, bourgeois ideology as a whole and with it bourgeois economics began abandoning both reason and history. Whether this abandonment assumed the form of a rationalism driven to its own self-destruction and turning into the agnosticism of modern positivism, or whether it appeared frankly in the form of some existentialist philosophy contemptuously rejecting all search for and all reliance upon a rational comprehension of history, the result was that bourgeois thought (and economics as a part of it) turned ever more into a neatly packed kit of assorted ideological gadgets required for the functioning and the preservation of the existing social order.
In its beginnings, economics was a revolutionary intellectual effort to seek out and to establish the working principles of an economic system best able to advance the cause of mankind. In its later days it has turned upon its own past, becoming a mere attempt at an explanation and justification of the status quo—condemning and suppressing at the same time all endeavors to judge the existing economic order by standards of reason, or to comprehend the origins of the prevailing conditions and the developmental potentialities that they contain. As Marx remarked: “The economists explain to us the process of production under given conditions; what they do not explain to us, however, is how these conditions themselves are being produced, i.e., the historical movement that brings them into being.”3
Thus the concern with economic and social change was left to a “heretical” school of economics and social science. Marx and Engels accepted in essence the insistence of the classical economists on capitalism’s giant contribution to economic development. Yet, not wedded to the now dominant capitalist class, and neither “consciously nor unconsciously” compelled to regard capitalism as the “natural” form of society and as the ultimate fulfillment of human aspirations, they were able to perceive the limits and barriers to progress inherent in the capitalist system. Indeed, their approach to the matter was radically different from that of bourgeois economics. While the latter was (and is) interested in economic development only to the extent that it has led to the establishment, and is conducive to the stabilization, of the capitalist order, Marx and Engels considered the capitalist order itself as likely to survive only as long as it did not become a fetter on further economic and social progress. Overcoming the limitations of bourgeois thought, they were able to comprehend the era of capitalism as merely creating the prerequisites for a development of humanity that would lead far