Political Econ of Growth. Paul A. Baran
be no more than shortlived; it has in fact not even affected the entire profession. Not only behind some recent writings on problems of economic growth, but even behind the more down-to-earth discussions of current business conditions and short-run economic prospects, lurks a gnawing uncertainty about the future of capitalism and a painful awareness that the impediments to economic progress that are inherent in the capitalist system are bound to reappear with renewed force and increased obstinacy as soon as the extraordinary hothouse situation of the postwar period has ceased to exist.
II
But if the lability of the economy of the United States (and of other highly developed capitalist countries) is giving rise to much concern and provides a stimulus to thinking about the basic problems of economic growth and development, the processes unfolding in the world at large cannot fail to lend these meditations the utmost urgency.
For the Second World War and the events that constituted its sequel were a major earthquake that shattered the structure of the capitalist world even more violently than the First World War and the Russian Revolution. Indeed, the First World War led “merely” to the loss of Russia to the capitalist system. The Second World War, however, has been followed not only by the Chinese Revolution, but by a nearly universal awakening of the vast multitudes inhabiting the world’s dependent and colonial areas. Aroused by the staggering irrationality and oppressiveness of their social and economic order, weary of the continuous exploitation by their foreign and domestic masters, the peoples of the underdeveloped countries have begun to manifest a mounting determination to overthrow a social and political system that is perpetuating their squalor, misery, and stagnation.
The momentous movement to do away with the entire edifice of imperialism, to put an end to the backwardness and prostration of the overwhelming majority of the human race, would by itself have created considerable consternation in the ruling class of the United States and other capitalist countries sitting on top of the imperialist pyramid. What has transformed this consternation into a state of near-panic, however, is the historic confluence of the restiveness in the underdeveloped countries with the spectacular advance and expansion of the world’s socialist camp. The military performance of the Soviet Union during the war and the rapid recovery of its war-ravaged economy provided the final proof of the strength and viability of a socialist society. There can no longer remain any doubt that a socioeconomic system based on comprehensive economic planning can function, grow, and withstand the most trying historical tests—without the benefits of private enterprise and without the institution of private property in the means of production. What is more, a large number of dependent countries went through a social revolution after the war, and thus entered the road to rapid economic and social progress. Eastern and Southeastern Europe, and even more importantly China, dropped out of the orbit of world capitalism and became sources of encouragement and inspiration to all other colonial and dependent countries.
As a result of these developments, the issue of economic and social progress not merely returns to the center of the historical stage but relates—as two or three centuries ago—to the very essence of the widening and sharpening struggle between two antagonistic social orders. What has changed is perhaps not so much the nature and the plot of the drama as the leading dramatis personae. If in the seventeenth and eighteenth centuries the struggle for progress was tantamount to the struggle against the outlived institutions of the feudal age, similarly current efforts to bring about conditions indispensable for economic development in advanced and backward capitalist countries alike come continuously into conflict with the economic and political order of capitalism and imperialism. Thus to ruling opinion in the United States (but also in some other parts of the capitalist world), the world-wide drive for economic progress inevitably appears as profoundly subversive of the existing social order and of the prevailing system of international domination—as a revolutionary movement that has to be bribed, blocked, and, if possible, broken, if the capitalist system is at all to be preserved.
It is needless to say that approaching economic development from this standpoint amounts to its repudiation. As far as advanced capitalist countries are concerned, the incompatibility of sustained economic growth with the capitalist system has been brought into sharp relief by some of the recent writings on economic growth. The mere specification of the conditions that need to be fulfilled for output to increase at rates that would be attainable with the available human and material resources—presented in different forms by Domar, Harrod, Colm, and others—shows with utmost clarity that such rates of increase are impossible under capitalism. Indeed, both consumption and private investment are rather narrowly circumscribed by the requirements of profit maximization under conditions of monopoly and oligopoly, and the nature and volume of government spending are no less rigidly determined by the social basis and function of the state in a capitalist society. Consequently neither maximum output, rationally allocated as between investment and consumption, nor some predetermined level of output combined with a lessening of the burden of work, are to be expected in the capitalist system. What appears to be more probable is the continuous re-emergence of the grim dilemma between war-induced bursts of output and depression-induced floods of unemployment.
Yet, although demonstrating, and indeed greatly clarifying, the vicious and portentous nature of this impasse, none of the writers just mentioned has stated what is an inescapable conclusion of their own investigations—that socialist economic planning represents the only rational solution of the problem. To be sure, it may be held that there is no need for explicit statements of what necessarily emerges from the logic of a rigorous argument. However, even self-evident truths must be communicated if they are to be recognized as such by those whom they may otherwise escape. Nothing is perhaps more characteristic of the intellectual atmosphere surrounding the present discussion of economic growth—a discussion in which truisms and trivia abound—than that it is this self-evident truth that is strictly taboo even to the most enlightened writers on the subject.
Matters are still worse when it comes to economic development in underdeveloped countries. There a maze of pretense, hypocrisy, and make-believe confuse the discussion, and a major effort is required to penetrate the smoke screen obscuring the main issue. What is decisive is that economic development in underdeveloped countries is profoundly inimical to the dominant interests in the advanced capitalist countries. Supplying many important raw materials to the industrialized countries, providing their corporations with vast profits and investment outlets, the backward world has always represented the indispensable hinterland of the highly developed capitalist West. Thus the ruling class in the United States (and elsewhere) is bitterly opposed to the industrialization of the so-called “source countries” and to the emergence of integrated processing economies in the colonial and semi-colonial areas. This opposition appears regardless of the nature of the regime in the underdeveloped country that seeks to reduce the foreign grip on its economy and to provide for a measure of independent development. Whether it is a democratically elected government in Venezuela, in Guatemala, or in British Guiana, an indigenous popular movement (as in Kenya, in the Philippines, or in Indo-China), a nationalist administration (as in Iran, Egypt, or Argentina) that undertakes to oppose the foreign domination of its country—all leverages of diplomatic intrigue, economic pressure, and political subversion are set into motion to overthrow the recalcitrant national government and to replace it with politicians who are willing to serve the interests of the capitalist countries.
The resistance of imperialist powers to economic and social development in colonial and dependent territories becomes even more desperate when the popular aspirations to national and social liberation express themselves in a revolutionary movement that, internationally connected and supported, threatens to overthrow the entire economic and social order of capitalism and imperialism. Under such circumstances, the resistance hardens into a counter-revolutionary alliance of all imperialist countries (and their reliable retainers) and assumes the form of a systematic crusade against national and social revolutions.
The requirements of this crusade have molded decisively the attitude toward the development of underdeveloped countries prevailing at the present time in the Western world. As the Prussian Junkers presented the continuation of serfdom on their estates as indispensable for the defense of Christianity against the onslaught of liberal godlessness, so the drive of the Western ruling classes to maintain the economic, social, and political status quo in underdeveloped countries