Political Econ of Growth. Paul A. Baran
produce the mechanism of such personality-molding, to provide the material and psychic framework for a specific type of human existence, that makes this social constellation a social order.
Economists, nevertheless, try to appraise that social order, its so-called efficiency, its contribution to human welfare, by criteria that it has itself evolved.8 What would we think of judging the welfare contribution of homicide by the code of behavior established in a cannibalistic society? The best that can be attained in that way is a judgment on the consistency of the cannibals’ behavior with their own cannibalistic rules and regulations. This kind of inquiry may be useful to an effort to devise arrangements needed for the preservation and better functioning of the cannibalistic society—but what is there to be deduced from such an investigation in terms of human welfare? Assuming, indeed, that the life of the cannibals fully conforms to the precepts of their society, that their headman gets exactly as many scalps a year as are called for by his wealth, his status, and his connections, and that all the other cannibals consume exactly the number of foreigners that corresponds to their marginal productivity and never in any other way but through a free purchase in a free market: do we then have a state of an optimum, can we then say that the cannibals’ welfare is well looked after? It should be obvious that nothing of the sort follows. All we have established is that the practice of the cannibalistic society corresponds more or less fully to the principles evolved by that society. We have said nothing at all about the validity or rationality of those principles themselves or about their relation to human welfare.
Thus welfare economics engages in what comes very close to compulsive brooding on the extent to which the existing economic organization satisfies the rules of the game laid down by the existing economic organization, on the degree to which the productive apparatus of a capitalist society is “efficiently” organized for the production of an output the size and composition of which are determined by the structure of that productive apparatus. Furthermore, it laboriously inquires into the degree to which the existing socioeconomic organization allocates resources in such a manner as to correspond to consumers’ demand which in turn is determined by the distribution of wealth and income, by the tastes and values of people which are themselves shaped by the existing socioeconomic organization. All this has absolutely nothing to do with the exploration of the conditions that are conducive to welfare or with the study of the measure to which the economic and social institutions and relationships of capitalist society further or impede the well-being of people.
But a conventional practitioner of welfare economics will stop us here, and ask what other criteria of welfare do we have.9 If the actual, observable performance of the individual in the market is not to be accepted as the ultimate test of what constitutes his welfare, what other test are we to use?
The mere fact that this question is raised indicates how far we have traveled along the road to irrationality and obscurantism since the days of classical philosophy and classical economics. In truth, the answer to this question is simpler than one may think—at once simpler and more complicated. The answer is that the sole criterion by which it is possible to judge the nature of a socioeconomic organization, its ability to contribute to the general unfolding and growth of human potentialities, is objective reason. It was objective reason that underlay the criticism of the then existing society undertaken by men like Machiavelli and Hobbes, and it was objective reason that inspired Smith and Ricardo to call feudal lords, courtiers, and the established clergy of their time parasites because they not only did not contribute to the advancement of their societies, but drained them of all possibilities of growth.
Not that the substance of objective reason is fixed immutably in time and space. On the contrary, objective reason itself is embedded in the never-resting flow of history, and its contours and contents are no less subject to the dynamics of the historical process than nature and society in general. “One cannot step twice into the same stream,” and what is objective reason on one historical stage is unreason, reaction on another. This dialectic of objective reason has nothing in common with the relativistic cynicism of pragmatism or with the opportunistic indeterminateness of the sundry philosophies of the élan vital; it is firmly anchored in man’s expanding and deepening scientific understanding of both nature and society, in the concrete exploration and practical exploitation of the natural and social conditions of progress.
The historically shifting and ambivalent attitude toward progress and objective reason that has been characteristic of bourgeois thought ever since the bourgeoisie began to be continuously torn between opposition to feudalism and fear of nascent socialism accounts for the fact that the socialist critique of prevailing social and economic institutions used occasionally to find a relatively sympathetic reception on the part of bourgeois economics as long as it was directed at the residues of the feudal order. The squandering of wealth by the landlords in backward countries was no less an admissible target of attack than their prodigality under the ancien régime in the more advanced countries. There has always been much less tolerance when it came to the critique of capitalist institutions sensu stricto. And at the present imperialist stage of capitalist development, to emphasize for instance the sociopolitical structure of backward countries as the main obstacle to their progress is considered almost as suspect as to insist on the role of imperialism in the advanced capitalist countries in retarding development at home and in perpetuating stagnation in underdeveloped areas.
Similarly economists socially and mentally anchored in the competitive, petty-bourgeois phase (and stratum) of capitalist society have developed a certain degree of clairvoyance with respect to the irrationality, wastefulness, and cultural consequences of monopoly capitalism. Oblivious of the fact that it is liberal, competitive capitalism that inescapably breeds monopoly, they recognize some of the economic, social, and human costs of capitalism’s monopolistic phase, discern some of the most obvious manifestations of excess consumption, unproductive activities, the irrationality and brutality of “economic royalism.” At the same time the writers who have either liberated themselves from the shackles of an earlier age, or who have grown directly into the “new era,” are at times impressively perspicacious when debunking the competitive order of the past—the sacrosanct virtues of capitalism’s competitive adolescence.
While this tension within bourgeois thought accords a certain amount of insight (and information) that permits at least a proximate assessment of the nature (and magnitude) of potential economic surplus, the always latent and sporadically erupting conflict between the interests of the capitalist class as a whole and those of its individual members offers another opportunity for the comprehension of the issues involved. Thus in times of war, when victory becomes the dominant interest of the dominant class, what under the circumstances constitutes objective reason is permitted to ride roughshod over particular interests and subjective utilities. Whether it is compulsory service in the armed forces, war economic controls, or requisition and confiscation of necessary supplies, objective needs become recognized as fully ascertainable and are assigned a significance vastly superior to that of individual preferences revealed by market behavior. Yet as soon as the emergency passes, and further admission of the existence and identifiability of objective reason threatens to become a source of dangerous social criticism, bourgeois thought hastily retreats from whatever advanced positions it may have temporarily reached and lapses once more into its customary state of agnosticism and “practical intelligence.”
What constitutes “excess consumption” in a society could be readily established if this question received but a fraction of the attention that is accorded to problems as urgent and as important as for instance the measurability of marginal utility. With regard not only to underdeveloped countries but to advanced ones as well, what represents “essential consumption” is far from being a mystery. Where living standards are in general low, and the basket of goods available to people little variegated, essential consumption can be circumscribed in terms of calories, other nutrients, quantities of clothing, fuel, dwelling space, and the like. Even where the level of consumption is relatively high, and involves a large variety of consumer goods and services, a judgment on the amount and composition of real income necessary for what is socially considered to be “decent livelihood” can be made.10
As mentioned before, this is precisely what has been done in all countries in emergency situations such as war, postwar distress, and the like. What