Analyzing and arresting uneven development: Friedrich List and Gunnar Myrdal compared.

Author:Ho, P. Sai-wing
 
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Among other contributions, Gunnar Myrdal is known for his investigations into the uneven development between developed and underdeveloped countries. His analysis is extremely rich, embodying as it does both "economic" and "noneconomic" factors. One of the forces engendering such development that he paid quite a bit of attention to was that played by international trade between the two groups of countries. In pursuing his investigation with that as one of the chief focuses, his analysis can be regarded as resembling that of a "development economist" who wrote in the first half of the nineteenth century, Friedrich List.

Other researchers have mentioned that there are similarities between the two (Gottfried Haberler [1959] 1988, 25, n. 10; Frederick Clairmonte 1959, 41; Leonard Gomes 1987, 272). However, they do so in passing and say little or nothing about where the similarities are. By far the most comprehensive comparison is the one made by James Belshaw (1959), who claimed that "despite differences in sophistication of economic knowledge, logical arrangement of ideas, and clarity of argument, there are ... some striking similarities" between the two (415).

He divided his discussion into six headings: "Value Premises and Objects of Study," "Attitude towards Orthodox Economics," "Agriculture versus Manufacturing," "Theory of International Trade," "Need for a New Approach in Economics," and "Policy" (415). Under headings so general, it would appear that nothing is left for further comparison and contrast. This paper contends, however, that central focus should be placed on Myrdal's concept of circular and cumulative causation, which in List's works is expressed as various kinds of "reciprocal" effects. (1) For it is the extensive reach of such processes, encompassing as they do "economic" as well as "noneconomic" factors, that explains the breadth and sophistication of their recommendations for development promotion. Seen in that light, it is grossly misleading to label both as "protectionists" (as defined in the mainstream trade literature). Both also supported that some international agreements or understanding be reached so that the underdeveloped countries would be given opportunities to implement their policy advice to catch up with the advanced. This has an interesting relevance to the current debate on globalization.

Myrdal's Cumulative Causation and List's Reciprocal Effects

Among institutionalists, Myrdal's conceptualization of the process of circular and cumulative causation needs no introduction. It is mentioned in Belshaw 1959, except that it does not constitute a central focal point. Indeed, its mentioning is scattered among different parts of his discussion (418, 424,425-7). One reason for its subsumption could be that he did not find in List's National System a clear counterpart to Myrdal's cumulative causation. That is not to say that he did not have some inkling (419, 431). At one point he wrote, "Though List makes no mention of the process of circular causation the recognition of the importance of this is implicit in his discussion of agriculture and manufacture" (428). Elaboration on this is found several pages earlier, where he quoted List: "'a continuous increase of the agricultural surplus produce will occasion a continuous increase of the demand for manufacturing workmen.' If a state does succeed in commencing development then 'agriculture and industrial productive power will increase reciprocally, and indeed ad infinitum'" (423, from List [1841] 1991, 155). (2) As it turns out, there are many more dimensions to these "reciprocal," or "mutual dependence," effects in List's works that render them strongly resembling cumulative causation processes.

Thus, within the manufacturing sector, all individual branches of industry have the closest reciprocal effect on one another; ... the perfecting of one branch prepares and promotes the perfecting of all others; ... no one of them can be neglected without the effects of that neglect being felt by all; ... in short, the whole manufacturing power of a nation constitutes an inseparable whole. (List [1841] 1991,387) In this manner, "by the establishment and continuance of industry one branch of trade originates, draws after it, supports and causes to flourish many others" (298).

At least as important are the multifarious reciprocal effects between manufactures and other parts of the economy and society. Thus, "[m]anufactures everywhere first brought into operation improved means of transport," and these constitute the "fundamental elements of improved systems of agriculture" (109; see also 201-2, 268). "By these [improvements] ... the surplus produce of the agricultural land [could be] converted into machinery for yielding income, ... [and] the powers of labour of those who are employed by it brought into activity." (3) The demand for raw materials is stimulated and so is the demand for food. The latter includes nonstaples, which will alter land use. (4) Improved transportation also made possible fuller utilization of different kinds of natural resources, for "all minerals, all metals, which heretofore were lying idle in the earth are now rendered useful and valuable" (211-2).

Furthermore, "[i]n the manufacturing State the industry of the masses is enlightened by science, and the sciences and arts are supported by the industry of the masses" (200, see also List [1837] 1983, 64). (5) And arts and science are by no means the only areas of "mental production" that are stimulated by manufactures. Better transport facilities necessitated by manufactures "are a powerful means of improving a people's level of culture" ([1837] 1983, 53). Similarly, "a vigorous middle class ... could...

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