ISBN: Ostalo
Godina izdanja: 1957
Oblast: Ekonomija
Jezik: Engleski
Autor: Strani

Harvey Leibenstein - Economic Backwardness and Economic Growth
John Wiley and Sons, 1957
295 str.
tvrdi povez
stanje: dobro, pečat na predlistu, beleške na par strana. No Dust Jacket.
Studies in the Theory of Economic Development

This book employs the tools of traditional economic theory to produce an
abstract analysis of economic backwardness and economic growth. The central
thesis consists of two parts: (i) Economic backwardness involves a condition
of quasi-stable equilibrium such that any
small growth in per capita income sets
up forces, such as population growth,
which operate to reduce per capita income and reverse the initial growth. (ii)
In order to achieve sustained growth, the
initial impetus to growth must exceed
some critical magnitude necessary to
overcome the reversing effect of the income-reducing forces.
This thesis involves much more than
the obvious statement that, in order to
raise per capita income, production must
outrun population growth. On the one
hand, the possible forces operating to reverse growth include not only population
increase stimulated by higher incomes
but also overconsumption, the exhaustion
of particular limited resources, and institutional rigidities. On the other hand,
these forces are of a limited magnitude,
so that an initial growth above some critical rate will not be reversed but will tend
to lead to further growth.
Possible patterns of quasi-stable equilibrium are examined analytically and
used to explain some of the known characteristics of less-developed countries.
The minimum effort necessary for sustained growth is considered analytically,
and abstract models for growth are developed. Finally, an analysis is made of
rates of population growth, of investment, and of appropriate investment
policies.
The central theme of the book presents a promising hypothesis to be tested, and the detailed analysis constitutes useful pioneering in a field that is underdeveloped. At the same time, the analysis is likely to leave the reader with a sense of unreality. There is no evidence that the author has had any actual experience with underdeveloped countries. The application of market analgsis to countries such as India and Pakistan, where more than two-thirds of production is for communal use and lies outside the market; the neglect of the community development programs which are proving so successful in so many of the developing countries; the treatment of increased capital investment per capita as the determinant of per capita growth in income; the absence of any discussions of the role of development planning; and the exclusion of the balance-of-externalpayments problem, which so seriously plagues most countries which are seeking more rapid development-all these aspects of Leibenstein`s book indicate how partial the analysis is and how little it grapples with the real problems of economic growth, however successful it may be in diagnosing economic stagnation.

GARDINER C. MEANS
Committee for Economic Development

------------------------------------

DR. LEIBENSTEIN has had the interesting idea of marrying an economic
growth model (recognisably of the Harrod-Domar family) with a population growth model, of the kind familiar to demographers. Though he has
something to say on other aspects of development, and underdevelopment,
I do not think one does him an injustice if one treats this ` economicdemographic ` model as the core of his book. Certainly it is the heavy
emphasis that is laid upon this aspect which differentiates his treatment
from that of other writers on his general subject.
It is crucial to Dr. Leibenstein`s theory that the natural increase in
population can be ascribed to similar forces as those which are supposed
(by the accelerationists) to govern the accumulation of capital; and that
the reaction of population increase on economic growth can be analysed in
similar terms. The model which is based upon these contentions may be
summarised very roughly as follows.
Apart from the population reaction, the balance of saving and investment is fundamentally unstable; if a ` random disturbance ` increases
investment, capital begins to grow, output grows with it and the growth of
output sets up an incentive to further expansion. It is by a mechanism of
this sort that developed countries have developed; why is it that others (the
underdeveloped or backward economies) have failed to develop in this
manner? The answer, according to Dr. Leibenstein, is to be found in
the population reaction. If one starts from a high level of output per head,
the rise in output (just specified) does not call forth any significant rise in
population; the accelerator can therefore work unimpeded. If, however,
one starts from a low level, the expansion in population that will be called
forth will be so large as to drown the expansionary effect of the increase in
aggregate output-so far, at least, as real income per head is concerned.
Expansion in aggregate output will accordingly result in a mere maintenance, or possibly in a decline, of real income per head. The failure of per
capita income to expand is then taken to be a retarding influence on the
general expansion. This braking effect is so powerful, in the case of underdeveloped countries, that their natural state is one of ` stable equilibrium.`
They are unable to grow, because their growth would be checked by the
population increase which would be induced by any expansion in net
income.
The practical conclusion that is drawn from this analysis is that to break the jam there must be a disturbance, an ` effort,` which is greater
than some ` critical minimum.` The initial rate at which income rises
must be large enough to offset the population check; indeed, if the initial
growth is sufficiently rapid, the population increase will itself be damped
down. Once a maintainable rate of growth in per capita income can be
established, the hurdle is overcome; the backward economy passes out of
its ` stable equilibrium ` into a condition of automatic growth.
The idea of a ` critical minimum ` is, of course, by no means peculiar
to Dr. Leibenstein`s theory; but no one else, to my knowledge, has formulated it in such exclusively populationist terms. Can one really ascribe to
the population factor quite so dominating a role in the causation of underdevelopment?
There are, I think, two things, and two only, which in this field do
stand reaLly firm. One is the awe-inspiring increase in population which
is at present taking place in a large number of underdeveloped countries,
especially in the tropics; the other is the sequence of an expanding, and
then a contracting, phase in the rate of population increase which most
of the more developed countries have historically experienced. These are
the foundations on which Dr. Leibenstein has raised his theory. But do
they bear the weight that he has put upon them?
One may well be prepared to go along with him in his economic explanation of the two phases in the population history of the developed
countries. One can understand that the willingness to bear children, and
the power to rear them to maturity, can be influenced by economic forces
in such a way as will go far to explain the historical facts. But this, for
his purpose, is by no means enough. He has to show that the increase in
population, which is admittedly a frequent accompaniment of economic
growth in its early stages, does in fact act as a braking factor. On all
this side of the matter he seems to me to be quite unconvincing.
I have indeed searched in vain for a clear account of the way in which
the model is supposed to work at this point. I have tried to mend it by
inserting a bit of Ricardo; Ricardo certainly did get an answer which
from Dr. Leibestein`s point of view is the right answer, but the mechanism
on which Ricardo relied is quite foreign to Dr. Leibenstein`s, who (throughout his work) pays the minimum of attention to distributional considerations. The Keynesian considerations (effects of increasing population on
the incentive to investment) that can easily find a place among Dr. Leibenstein`s curves, work (as Keynes himself showed) the wrong way. The
only thing that is left (and I suppose that it is from this that the brake is
supposed to come) is a deficiency of saving. But if the underdeveloped
country is always trying to invest ahead of its savings, its situation should
be chronically inflationary. It can only be an excessive attention to the
special problems of South America at the moment (to which North American writers on underdevelopment are undoubtedly prone) which can make anyone imagine that the ` static equilibrium ` of the underdeveloped
has any special inflationary potential about it.
Something, surely, has gone wrong. It seems to me that what is wrong
is not merely the odd view of history which is implied throughout the whole
of this work; there is a bit of a mix-up on the theoretical level also. In
an early chapter a good deal is made of the distinction between a stable
and a quasi-stable equilibrium-roughly speaking, the one is a condition
where nothing changes, the other is a condition where some things change,
but others don`t. The only bearing that this distinction can have upon
the later work is to enable the author to regard a condition in which
population is increasing, but real income per head is not increasing, as a
quasi-stable equilibrium. That, of course, is a mere matter of definition;
but it turns out to be a dangerous definition, because it enables him to
proceed as if the full equilibrium, in which there is no growth in any
direction, and the quasi-stable equilibrium, in which the growth of other
resources does no more than match the growth in population, were very
much the same thing. That, surely, is just nonsense. If we accept it,
the condition of England from 1750 to 1850 (the very archetype of all
` take-offs `) is made indistinguishable from that of, say, Portugal during
the same period. Surely the fact is that to be able to accommodate a
large growth in population, without fall in real income per head, does
itself demand a most important growth in resources; it cannot readily be
achieved excepting in an economy which is already geared to extensive
change.
To an economy of this latter type the dynamic theory of Harrod and
Domar (or something akin to it) may well have become applicable; but
to an economy which has not learned to grow, even in that way, it is surely
not applicable at all. It is just not true that the main thing which stops
such economies from going forward is potential population pressure. (How,
incidentally, would Dr. Leibenstein explain the Roman Empire?) Nor,
for that matter, is the population pressure from which so many underdeveloped countries are at present suffering a consequence of abortive
economic development; it clearly springs from other causes. If Egypt or
Ceylon (to name two countries where population pressure has already
reached the stage of political explosion) could achieve the ` quasi-stable
equilibrium ` of early-nineteenth-century Britain, they would be over
their immediate hurdle. Problems of this sort are left by Dr. Leibenstein,
as a result of the way he has posed his questions, right out of account.
I have tried, in this review, to concentrate on central issues; and since
I have become convinced that the book is quite wrong on central issues,
I have doubtless done less than justice to the incidental virtues which it
possesses.
Dr. Leibenstein is an artist in diagrams; when he applies his technique
to simpler problems, such as the effect of changes in real wages on the
individual supply of labour, the result is often distinctly helpful. But it
may well be that on the main issue it is his excessive reliance on the diagrammatic method which has led him astray. If he had endeavoured,
more frequently, to set out the more intricate parts of his argument in
plain prose, he might possibly have got more idea of what a queer tree
it was that he was climbing up.

J. R. HICKS
All Souls College,
Oxford


Nonfiction, Economics