Development and Underdevelopment in Historical Perspective

Populism, Nationalism and Industrialisation

Gavin Kitching

• Publisher: Routledge
• Year: 2012
• Print ISBN: 9780415602075
• eBook ISBN: 9781136856228
• Edition: 1
• Topic: Economics
• Subtopic: Business General
• Index: Economics

How do the intellectual origins and historical background of western and other theories of development affect their relevance to contemporary Third-World conditions? This is the central question behind Gavin Kitching's examination of 'development studies', first published in 1982, from its origins in the late 1940s through to the contemporary era. While presenting the contemporary 'radical orthodoxy' of development studies, Kitching argues that these theories are continuations of much older traditions of populist and neo-populist thought.

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An old orthodoxy

THE NEED FOR INDUSTRIALIZATION

We are concerned in this chapter with an apparently simple idea – ‘if you want to develop you must industrialize’. We can think of this idea either as a theoretical proposition derived by logical reasoning from set of assumptions or as a historical or empirical idea, a comment upon or generalization from events which have happened in the real world. However, there is a difference. For if the proposition were only historical or empirical, it would carry no force of necessity, i.e. even though we can show that almost invariably as the per capita incomes of countries have risen, so the importance of industry in their economies has increased, while the importance of agriculture has diminished, there is no logical necessity for this to be so in the future just because it has nearly always been so in the past. We cannot preclude the logical possibility that there might be ways of raising per capita incomes over the long term without industrializing. Historical or empirical evidence (which we present in Table 1) can never be absolutely conclusive proof or disproof of any theoretical proposition.

There is, however, a very powerful theoretical argument which seems to suggest that there is a definite limit to the levels of prosperity which can come from agricultural production alone. The argument runs as follows. If we imagine a society consisting entirely of small-scale peasant producers of food who are not exporting to or importing from any other economy (i.e. a closed economy), then:

1 at first they will be producing mainly for their own consumption of food, and will therefore produce a wide variety of food crops; but in due course, they begin

2 to trade among themselves (we can either think of this as barter of some foods for others, or sale for money). As they do this, so

3 individual peasants or groups of peasants begin to specialize in the production of particular crops (say crops for which their land or local climate is particularly suitable). As a result, they become more skilled at specialized production and their productivity grows (they produce more crops from the same total land and perhaps even more crops with less input of labour). As a result of this

4 they are able to barter for or buy more and more food from each other, i.e. their individual incomes and their total income grow along with their total output. However, it is obvious that

5 this process must have a definite limit, for the need of human beings for food is finite, and after a while the need of the peasants (as consumers) for food will not grow as fast as their output and income is growing. Economists express this by saying that the ‘income elasticity of demand’ for food is limited, i.e. as income rises past a certain point, so the demand for food rises less and less with each subsequent rise in income.

Table 1 Shares of agriculture and industry in the economies of selected developed and underdeveloped countries c. 1800-1985 and their per capita GNP in 1985

	Share of	Share of	GNP per cap
Country	agriculture (%)	industry (%)	1985 ($)
UK
1801	32	23
1901	6	40	8460
France
1835	50	25
1962	9	52	9540
Germany
1860	32	24
1959	7	52	10940
USA
1869	20	33
1963	4	43	16690
Japan
1878	63	16
1962	26	49	11300
USSR
1928	49	28
1958	22	58	4550^*
Bangladesh
1960	61	8
1985	57	14	150
Kenya
1960	38	18
1985	41	20	290
Thailand
1960	40	19
1985	27	30	800
Bolivia
1960	26	25
1985	17	30	470
Ivory Coast
1960	43	14
1985	21	26	660
Turkey
1960	41	21
1985	27	35	1080

Sources: Kuznets (1966, Table 3.1, pp. 88-92) and World Bank (1987, Tables 1 and 3, pp. 202-207).

* 1980 figure (from World Development Report 1982, Table 1, p. 111

In this situation it will make sense for some or all of the peasants to exchange their surplus food, not for other types of food, but for other goods which they need, such as clothing, footwear, better housing, etc. But of course this can only happen if there is some sort of (albeit small-scale) industry or manufacture of these things in existence. We can even go a little further here, and say that the development of agricultural productivity and thus of the agricultural surplus to a certain level is a necessary precondition for the emergence of specialist producers of non-agricultural commodities. For the emergence of such a surplus makes it possible for some people to give up subsistence agriculture entirely and trade non-agricultural products for food, and at the same time it enables an ‘effective demand’ for these goods to emerge, i.e. it creates a ‘surplus’ of food which can be exchanged for such goods (and indeed for non-material services such as are provided by priests or government officials). There have even been one or two attempts to quantify the level of agricultural productivity required to allow the emergence of non-agricultural production and trade. Using a measure of food output of‘ kilogrammes of grain equivalent per person per year’, De Vries for example calculated that the subsistence minimum for life stands at about 300 kg. Up to about 350 kg, he suggested, productivity improvements mainly go to improve diet, but at 400 kg and beyond sale of food and the emergence of full-time non-agricultural producers is possible (Clark and Haswell 1964, pp. 63-7). Certainly such numbers cannot be generalized across all history and all economies, but they do perhaps indicate the orders of magnitude involved. They also indicate, incidentally, that specialization and the beginnings of non-agricultural production start at only a short distance from the subsistence minimum. Nothing like an ‘abundance’ of food needs to be assumed.

However, if the inherent limitation on the human need for food suggests a necessary limitation on any economic development strategy focused purely on food production, this in itself tells us very little about the possibilities for a non-industrial development strategy for a particular economy in the real world. For, first, agricultural production is not restricted to food. Many industrial raw materials (such as sugar, vegetable fibres, oil and oil seeds, etc.) are agricultural products, and so even when non-agricultural production begins, it may produce an increased demand for agricultural products to replace or supplement the slowing demand for extra food. All over Europe and Japan from the sixteenth century onwards, the spread of the textile industry (using wool, flax and silk) increased the demand for plant and animal products, and when industrial production of cotton textiles began in Europe from the late eighteenth century onwards, that demand spread to the tropical and sub-tropical regions of the world where cotton could be grown.

However, whilst industrial demand for agricultural raw materials shows the practical limitations of the logical argument which we constructed earlier (based entirely on food production), it hardly counts as evidence for a non-industrial development strategy. This is because such a demand implies the presence of industry, or at least of non-agricultural manufacture (though this could be, and often was, on a small-scale or household basis).

There is, however, a second and more important weakness in the logical argument we presented above. For there we assumed that we were dealing with a ‘closed economy’, i.e. a closed system with no exports or imports. But of course in the real world there are a multitude of economies (mainly nation-states) with trade links between them. There is thus the possibility of having an agricultural economy or economies in which output and incomes grow as a result of the export of food and/or agricultural raw materials to other economies. If the exports are primarily food then we can assume that they will eventually meet the same natural limits as we specified above, and so a modified form of the original logic holds. If, however, the exports are agricultural raw materials for industry, then there may be continually rising output and incomes in the agricultural economy as a result of continually rising demand in the industrialized or industrializing economies. Something approximating this has certainly happened in the real world. The economic development of Denmark, New Zealand and Australia in the late nineteenth century was initially based on the export of meat and dairy products to the rapidly growing industrial economies of Europe, while in the period since the Second World War the economic development of the new states of Africa and South and South-East Asia has mainly been based on the export of food and agricultural raw materials to the industrialized economies of the west

We have therefore to modify our original argument somewhat. Continually rising output and income (and therefore possibly continually rising per capita output and income) may occur in an agricultural economy provided that there are industrial (or at least non-agricultural) economies somewhere to provide continually expanding markets. The necessary blockage on ‘pure’ agricultural development of food crops, based on the structure of human needs, operates on a world scale (there must be non-agricultural economies somewhere) but not necessarily at the level of an individual national economy.

Once again, however, we are operating at the level of economic logic, and that may be a very poor guide to reality. In the real world, for example, we find that economies which at a certain stage in their development are dependent entirely or almost entirely on the production and export of food and raw materials very rarely stay that way, i.e. sooner or later an industrial structure emerges within these economies. There may be purely ‘economic’ reasons for such a development, to do with locally available raw material sources or the ‘natural’ protection afforded to local industrial producers by transport costs for competing imports. But very often the main impetus to such industrialization is political; governments of independent nation-states desire to have their ‘own’ industrial sector to decrease dependence on foreign suppliers, and to provide a base for an independent military capacity. They thus take steps to provide a favourable economic environment for local industrialization. It is such actions by governments which ensure that the agricultural surpluses of their economies are converted into demand for and investment in ‘national’ industries, rather than simply increasing local demand for already existing ‘foreign’ industries.

So then, summing up this section, we can say that whilst, under certain circumstances, there is nothing in economic logic to suggest that continually rising per capita incomes are impossible in particular economies devoted entirely or dominantly to agriculture, both economic logic and empirical evidence suggest that this would only be possible if such economies coexisted with dynamic non-agricultural economies elsewhere and traded with them. If one adds to this the political dimension implied in the fact that since the late eighteenth century most developing economies have been competing nation-states, both empirical evidence, and what may be termed ‘economo-political’ logic, tend to suggest that the rulers of agricultural economies will try hard to industrialize them once other industrialized nation-states have come into existence.

SCALE AND CONCENTRATION

So, then, both logic and empirical evidence seem to suggest that sustained economic development is not likely to come from agriculture alone. Or at least, such is the conventional wisdom. But the argument above fails to address some very important issues (which, as we shall see, were dear to the heart of the populists) because it is formulated in very broad and a historical terms. To begin with, I have spoken above as if all forms of non-agricultural production were identical and have used the terms ‘industry’ and ‘manufacture’ to cover them all. But the nineteenth century political economists like Smith or Ricardo or Marx made a very clear distinction between ‘manufacture’ and ‘industry’, or what Marx called ‘machinofacture’ (Marx 1887, vol. I, pp. 336-427). In the one case – manufacture – what they mainly had in mind was small-scale household production of non-agricultural commodities. Here the machinery was usually owned by its operators, and the labour involved was wholly or mainly family labour. In the case of’ machinofacture’ however (what we would call industry), the machinery and the raw materials were owned by an owner/manager, a ‘capitalist’, they were installed in separate business premises, or factory, rather than in the homes of producers, and the labourers themselves were pure wage-labourers dependent on the wages paid by the capitalist for their entire livelihood

The change from ‘manufacture’ to ‘industry’ (a change which has been so total that we now no longer make this distinction, but use ‘manufacturing’ and ‘industry’ interchangeably) was thus a change of social structure, of ownership and economic power in society, as well as a change of scale. For industrial forms of non-agricultural commodity production involved much greater scale of production, the employment of much more labour and of fixed capital (buildings and machinery). It also meant much greater concentration of income and wealth in the hands of industrial capitalists, and the destruction of much of the earlier household production – especially in textiles to begin with, but then in other commodities – which was unable to compete with the new industrial capital. There was also a tendency for such industries to become spatially concentrated in new industrial towns and cities, and for peasants and former artisans (in the doomed handicraft or manufacturing industries) to migrate to such cities to seek work as propertyless ‘proletarians’ or workers

It was this enlargement of scale and its concomitant social and spatial concentration of industry, income and power which many of the populist thinkers of the nineteenth century objected to, and to which they juxtaposed their ideal of a society of small-scale agricultural and non-agricultural producers living in villages or at most in small towns. Populism was not simply, therefore, a defence of the peasantry and of the merits of agricultural development against industry. It was just as much, or more, the defence of small-scale enterprise and of social and economic equality based upon it, against large-scale enterprise and inequality in both industry and agriculture

For of course the use of the term ‘agriculture’ in the first part of this chapter was as loose as the use of the term ‘industry’. And just as in non-agricultural production, so in agriculture, ‘industrialization’ has meant the enlargement of the scale of production in large farms, estates and plantations, the increased use of fixed capital (especially agricultural machinery) and the employment of wage labour by profit- and output maximizing capitalist enterprises. It was to this transition too that populist thinkers objected from the early nineteenth century onwards, and to which modern, ‘neo-populist’, thinkers about contemporary development also object. We will consider the grounds of their objection in the next three chapters. For the moment we have to consider how conventional economic theory would explain a...

Table of contents

• Front Cover
• Half Title
• Title Page
• Copyright
• Title Page
• Copyright
• Contents
• SERIES EDITORS’ PREFACE
• PREFACE
• ACKNOWLEDGEMENTS
• Dedication
• INTRODUCTION
• 1 An old orthodoxy
• 2 Populism
• 3 Neo-populism
• 4 Neo-populism in modern development theory
• 5 Populist development in action? Tanzania and China
• 6 Populism and nationalism
• 7 Conclusions
• POSTSCRIPT
• BIBLIOGRAPHY
• INDEX