Economic Development: A Semantic History Author(s): H. W. Arndt Reviewed work(s): Source: Economic Development and Cultural Change, Vol. 29, No. 3 (Apr., 1981), pp. 457-466 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/1153704 . Accessed: 23/01/2012 06:30 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]
The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to Economic Development and Cultural Change.
H. W. Arndt Australian National University So commonplace has the concept of "economic development" become to this generation that it comes as a surprise to find the Oxford English Dictionary still unaware of "development" as a technical term in economics, as contrasted with its use in mathematics, biology, music, or photography. Nor, incidentally, is there an entry on "economic development" in the Encyclopedia of the Social Sciences. The story of how the term "economic development" entered the English language and came, for a time at least, to be identified with growth in per capita income is both curious and illuminating. Mainstream Economics Adam Smith spoke, not of economic development, but of "the progress of England towards opulence and improvement."1 "Material progress" was the expression almost invariably used by mainstream economists from Adam Smith until World War II when they referred to what we would now call the economic development of the West during those 2 centuries.2When Colin Clark in 1940 published his monumental comparative study of economic development, he still called it The Conditions of Economic Progress (the title Marshall had had in mind for the fourth volume of his Principles, which he had planned but never wrote).3 Economists and economic historians wrote about the rise of capitalism, the industrial revolution, the evolution of trade, or "The Growth of Free Industry and Enterprise."4 But this historical process appears 1 Adam Smith, The Wealthof Nations, ed. E. Cannan,2 vols. (1776; reprinted., London: UniversityPaperbacks,1961), 1:367. 2 For quotationsfrom J. S. Mill, A. Marshall,K. Wicksell,L. Robbins, A. G. B. Fisher, and others, see H. W. Arndt, The Rise and Fall of Economic Growth (Melbourne:
3 Colin Clark, The Conditions of Economic Progress (London: Macmillan Pub-
lishing Co., 1940);A. C. Pigou, ed., Memorialsof AlfredMarshall(London: Macmillan PublishingCo., 1925),p. vii. 4 A. Marshall, Principles of Economics, 2 vols., 9th ed. (London: Macmillan
PublishingCo., 1961), 1, appendixA:723. 0 1981 by The Universityof Chicago. 0013-0079/81/2903-0009$01.00
Economic Developmentand Cultural Change
rarely if ever to have been described as economic development. As a policy objective, economic development became increasingly prominent during the nineteenth century, first in Germany and Russia and other countries in Europe, later in Japan and China and elsewhere, in what we now call the "Third World." But it was generally referred to as "modernization" or "westernization" or, not infrequently, "industrialization." When Alfred Marshall used the word "development," it was in a literal sense, denoting merely emergence over time, as in "the development of speculation in every form"5 or "the development of social institutions."6 This remained generally true, at least in the British and American literature, until the 1930s. However, there were a few exceptions. One is J. A. Schumpeter's Theory of Economic Development; but this, though published in German in 1911 as Theorie der wirtschaftlichenEntwicklung, was not translated into English until 1934.7 A second exception is the use of the term "economic development" by economic historians in the 1920s. Lilian Knowles, reader in economic history at the London School of Economics, in 1924 published her book, The Economic Development of the British Overseas Empire, and mentioned in the preface that a unit with the same title had recently been made a compulsory subject for the Bachelor of Commerce degree of London University.8 A few years later, Vera Anstey, also at the London School of Economics, followed Knowles with her The Economic Developmentof India.9Another LSE economic historian, R. H. Tawney, in his book on China written in 1931 spoke of the "long process of development" that had occurred in the West and of the "forces which have caused the economic development of China" and referred to the analogy between China's twentieth-century economic condition and that of Europe in the Middle Ages as implying "a comparison of stages of economic development."10 These intriguing exceptions provide the clue to the two quite distinct channels through which the term "economic development" entered English usage. Tawney, like Schumpeter, knew his Marx. Lilian Knowles and Vera Anstey were historians of Empire. Marxist Origins In one sense, the birthplace of "economic development" in English would seem to be the first English translation of Marx's Capital and the date s Ibid., p. 752. 6 Ibid. 7 J. A. Schumpeter, The Theory of Economic Development, trans. R. Opie, Har-
vard EconomicStudies,vol. 46 (Cambridge,Mass.: HarvardUniversityPress, 1934).
8 L. C. A. Knowles, The Economic Development of the British Overseas Empire
(London: George Routledge & Sons, 1924),p. ix.
9 Vera Anstey, The Economic Development of India (London: Longmans, Green,
1929). 1oR. H. Tawney,LandandLabourin China(London:Allen & Unwin, 1932),p. 18.
H. W. Arndt
1887.Theprefaceto the firstGermaneditioncontainsthe famousstatementthat"itis nota questionof thehigherorlowerdegreeof development thatresultfromthe naturallawsof capitalist of the socialantagonisms of thesetendencies It is a production. questionof theselawsthemselves, towards inevitable results. Thecountrythat with iron working necessity the to less is moredevelopedindustrially only shows, developed,the in as the its own future."" of Here, subsequent passagewhenhe image in Germany, thatprevented, circumstances to "thehistorical the referred and mode of the of the production, consequently capitalist development Marx used in that of modern bourgeois society,"12 country, development, in thesensein whichit formsthekeyconceptof theword"development" of history. hiseconomicinterpretation As Schumpeter put it, in Marx'sschemaof thought,"Development his analytical powerson was..,.the centraltheme.Andhe concentrated itselfbyvirtueof thetaskof showinghowtheeconomicprocess,changing its own inherentlogic, incessantlychangesthe socialframework-the wholeof societyin fact."'3 As hasoftenbeenpointedout,Marxderivedhisconceptof developwhich ment,includingthe notionof phasesor stagesof development to an inexorable unfoldin a dialecticprocessaccording law,fromHegel. Hegel,in turn,stoodin a longtradition-fromAristotle,withhisconcept as therealization of "potential" matterin "actual" of development form, to Fichte,whowasthefirstto arguethat"history dialectically."14 proceeds strikenotesstrangely familiarto students Someof Hegel'sformulations literature. "Theprincipleof Development involves of recentdevelopment existence a of or the of latent germ being-a capacity potentiality ... strivingto realizeitself.. . . Thehistoryof theworld. . is theprocessof therefore,does not presentthe development....[This]development, harmlesstranquilityof meregrowth."l5But it was Marxwho gave a specifically economicconnotation. development is a constant Marx'snotion of stagesof economicdevelopment in this themein laterMarxistliterature, butit is difficultto findreferences countriesor nations.Whenthe literatureto moreor less "developed" International SecondCongressof the Communist of 1920reachedthe the conclusion that,pace Marx, capitaliststageof economic important is not one mustpass,thedistincthroughwhichallcountries development 11Karl Marx and Frederick Engels, Selected Works in Three Volumes (Moscow:
12 Ibid., p. 92. 13J. A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 573. 14For an account of this descent, see John Passmore, The Perfectibility of Man
(London: Gerald Duckworth & Co., 1970),chap. 11.
15G. W. F. Hegel, The Philosophy of History (New York: Dover Publications,
1956), pp. 54-55. In the last sentence of the quotation, Hegel's Entwicklungwas unaccountablytranslatedin the Englishversion as "expansion."
Economic Developmentand Cultural Change
tion drawn was between "oppressing" and "oppressed" or between "advanced" and "backward" nations: "In all colonies and backward countries.., .with the aid of the proletariat of the most advanced countries, the backward countries may pass to the Soviet system and, after passing through a definite stage of development, to communism, without passing through the capitalist stage of development."16 Colonial Development "Economic development" as used by the British historians of Empire of the 1920s is a concept quite different from the Marxist one, with a considerably longer history. What Lilian Knowles set out to write about in her history of the economic development of the British Overseas Empire was "the remarkable economic achievements within the Empire during the past centuries ... the hacking down of the forest or the sheep rearing or the gold mining which made Canada, Australia and South Africa into world factors... or the struggle with the overwhelming forces of nature which took shape in the unromantic guise of 'Public Works' in India."'7 A few years earlier, Lord Milner had warned, in an official memorandum, that "it is more than ever necessary that the economic resources of the Empire should be developed to the utmost,"18 and in 1929 the British Parliament passed a Colonial Development Act. Whereas for Marx and Schumpeter, economic development was a historical process that happened without being consciously willed by anyone, economic development for Milner and others concerned with colonial policy was an activity, especially though not exclusively, of government. In Marx's sense, it is a society or an economic system that "develops"; in Milner's sense, it is natural resources that are "developed." Economic development in Marx's sense derives from the intransitive verb, in Milner's sense from the transitive verb.19 16Quoted in Helkne Carrered'Encausseand S. R. Schram, Marxism and Asia (London: Penguin Press, 1969), p. 159. The original text was presumablyin Russian, but there is no reason to doubt that these words were accuratelytranslated. 17Knowles, p. vii. 18Quoted in F. D. Lugard, The Dual Mandate in British TropicalAfrica (Edinburgh: WilliamBlackwood & Sons, 1921), p. 489. 19"Economic development" in the intransitive sense had another potential source besidesthe line of thoughtthat led from Hegel to Marxand Schumpeter,but its contributionwas virtuallystillbornand deservesonly a footnote: This was the biological theory of evolution. Some years before Darwin's Originof Species, Herbert Spencer had begun to give the concept of biological evolution a social application(see esp. his "Progress:Its Law and Course"and "The Social Organism,"reprintedin H. Spencer, Essays, Scientific, Political and Speculative,3 vols. [London: Williams & Norgate, 1891],vol. 1.) He arguedthat social progresswas more than "simplegrowth";rather, like the evolution of a biologicalorganism,it was an "evolutionof the simple into the complex." At one point he mentionedthat "it has not been by commandof any ruler that some men have become manufacturers,while othershave remainedcultivators... it has arisenunderthe pressureof humanwants"(Spencer,pp. 8, 10, 266). However,he did not pursuethe idea any further.The only economist to take it up appearsto have
H. W. Arndt
The originsof the transitiveconceptof economicdevelopmentwhich, the 1920s,was in fairlycommonuse in the specialistBritishliterature by of colonialhistoryand policy are to be found, not in nineteenth-century British(or American)writingsabouteconomicsand economichistorybut in Australian(and to a lesserextent, Canadian)writings,and they go a long way back.The directorsof the Van Dieman'sLandCompany,which held large tracts of land on the Australianmainland,expressedin their thirteenthannual report of 1838 the dominantlocal opinion about the needs of the young colonies: "Populationis the only thing wanted to A colonial politicianmade the same developthe Company'slocations."20 a few in point yearslater, 1845,in the LegislativeCouncil of New South Wales:"Theresourcesof a newcountrycan onlybe developedby constant additionsto its population."21 The case for constructionof railwayswas put in similarterms in 1854--"Thebest and most economicalmeans of in 1861 one Charles developingthe vast resourcesof the interior"22--and Mayesin Melbournepublisheda pamphlet,entitledEssay on the ManufacturesMoreImmediatelyRequiredfor the EconomicDevelopment of the Resourcesof the Colony,23 whichthe OxfordEnglishDictionaryin its next editionmightwelllistas theearliest(so far) knownuse of the term"economic development." In Canada,too, as earlyas 1846,the CanadianEconomistarguedthat "Canadais now thrown upon her own resources,and if she wishes to But whereasin Australia prosper,these resourcesmust be developed."24 the transitiveuse of "development"was continuousand common from the middle of the nineteenthcenturyonward,25s-sideby side with synbeen the Australian,W. E. Hearn, whose Plutology (Melbourne:George Robertson, 1863) received honorable mentions by Jevons and Marshall. In a chapter on "The IndustrialEvolutionof Society," he expoundedthe Spenceriananalogy. The evolution of both an individualand a society "consists in, or at least is invariablyattendedby, an increaseof bulk, a greatercomplexityof structure."He used the idea to support a case for balanced growth between agricultureand industry:"In societies as in organisms, growth and development,increasedbulk and increasedcomplexityof structure, ought always to proceed with equal pace." He also, apparentlyunconscious of any inconsistency,introducedit in support of his laissez-faireprinciples:"Everyattempt to interferewith the ordinary developmentof a country," e.g., by protectingsome industries or restraining others, "tends to produce uniformity in the occupations of that country and so to arrest its developmentand retardits progress"(Hearn, pp. 384, 393, 437). But Hearn made nothing more of the idea, nor was it taken up by any of the later Social Darwinistsin the United States and elsewherewho were more interested in the survivalof the fittest. 20 Quoted in S. H. Roberts, History of AustralianLand Settlement(Melbourne: MelbourneUniversityPress, 1924),p. 68. 21Quoted in C. D. W. Goodwin, EconomicEnquiryin Australia(Durham,N.C.: Duke UniversityPress, 1966),p. 423. 22Quoted in ibid., p. 269. 23Quoted in ibid., p. 318. 24Quoted in H. A. Innis and A. R. M. Lower, Select Documentsin Canadian EconomicHistory 1783-1885 (Toronto: Universityof Toronto Press, 1933), p. 303. 25Cf., e.g., Goodwin, pp. 311(1877), 312 (1880),428 (1888),305(1889),297 (1918).
Economic Developmentand Cultural Change
onyms such as "opening up our natural resources"26or "the steady occupancy and proper advancement of the Colony,"27-the Canadian example is the only one so far discovered before the 1880s, and in the United States it does not seem to have been used at all in the nineteenth century.28 That "economic development" in the transitive sense entered the language and became common in Australia, while being used much less in Canada and not at all in the United States, is no historical accident. In the United States, and for much of the time also in Canada, economic development happened,as immigrants from Europe streamed in; settlers went west to take up fertile land; communities established towns and cities; private companies constructed railways; and mining, logging, manufacturing, banking, and other enterprises grew, within (and sometimes without) legal rules made by government. In Australia's hostile environment, where settlers from the earliest convict days had to contend with drought, flood, pests, distance, and more drought, economic development did not happen. It was always seen to need government initiative, action to "develop" the continent's resources by bringing people and capital from overseas, by constructing railways, and by making settlement possible through irrigation and other "developmental" public works.29 So well established did this notion become in Australia that by the 1920s it was referred to as "the doctrine of development before settlement."30 Developmentand Welfare Development of natural resources was not always viewed as a task of government. The British authority on colonial policy, J. S. Furnivall, referredto "the development of the material resources of Burma through trade and economic enterprise,"31and it was probably also in this sense that the term was used in an International Labour Office study of Brazil which identified "continuous occupation and development of the country, in space as in time," as "the primary condition for the economic exploita26E.g., ibid., pp. 282, 318. 27Latrobe, lieutenant-governorof Victoria (1851), quoted in Roberts, p. 287, The fact that these synonymsbegan to be displacedby "development"in the 1830sand 1840s may be explainedby the vogue which ideas of evolution and developmentwere enjoying about that time in naturalsciences,such as biology and geology; the Oxford EnglishDictionarycites uses in more generalliteraturein the same period,e.g., Harriet Martineau(1834), Dickens (1837), Emerson(1841), and Newman (1845). 28Thus the word "development"does not occur once in two works about aspects of nineteenth-centuryeconomic historyin the United States, railwaypolicy and public lands policy, the Australiancounterpartsof which use it constantly (see S. L. Miller, InlandTransportation [New York: McGraw-HillBook Co., 1933];and B. H. Hibbard, A History of Public Land Policies [New York: Peter Smith, 1939]).
29See F. W. Eggleston, "Australian Loan and Developmental Policy," An
Economic Survey of Australia, in Annals of the American Academy of Political and Social
Science 158 (November 1931): 193-201.
30Ibid., p. 197. 31J. S. Furnivall, An Introduction to the Political Economy of Burma, 3d ed.
(1931; reprinted., Rangoon: People's LiteratureCommitteeand House, 1957), p. i.
H. W. Arndt
tion of its resources]."32But whether the agent was government or private enterprise, "development" in this transitive sense was for long kept quite distinct from the process of economic development, usually still referred to as the "progress" of society or of the nation's wealth.33 Nor did it, in itself, connote a rise in living standards. It was development of resources, not of people. The three distinct concepts are nicely found together in the preface to the first official statistical yearbook of Australia in 1890, which described its purpose as being "to afford information by which the progress of these Colonies may be gauged.... So much has been accomplished in the developmentof the material resources of the new land, and the social well-beingof its people."34 How little economic development and welfare were synonymous until quite recently is most clearly demonstrated by the doctrine which, in British colonial theory, came to be called the "dual mandate."35One of the features of imperialism in its late nineteenth-century heyday was the emergence of notions of "trusteeship"for the welfare of the native peoples. Colonial government, it came to be thought, had two distinct functions, development and welfare. As a historian of French colonial policy has expressed it, the new colonial theorists demanded "a policy by which the conqueror would be most able to develop the conquered region economically, but also one in which the conqueror realised his responsibility to the native's.., .mental and physical well-being."36 It was very much in this spirit that the British government in 1939 replaced the earlier Colonial Development Act by a Colonial Development and Welfare Act. W. K. Hancock commented on the latter in 1942: "'Development and welfare' will probably be the cry of the generation which follows the present one. ... In the nineteenth century development occurred as a by-product of profit." The new concept is quite different: "It gives a positive economic and social content to the philosophy of colonial trusteeship by affirming the need for minimum standards of nutrition, health and education."37 Toward the Postwar Meaning All through the interwar years, the term "economic development," when it was used at all outside Marxist literature, continued to denote the development or exploitation of natural resources. 32 F. Mauretta, Some Social Aspects of Present and Future Economic Development
of Brazil, Studies and Reports, ser. B, no. 25 (Geneva: InternationalLabour Office, 1937),p. 9. 33See, e.g., Goodwin, pp. 86, 118, 124, 287. 34
T. A. Coghlan, A Statistical Account of the Seven Colonies of Australasia
(Sydney, 1890), p. v. (italics added). 35Lugard(n. 18 above). 36
R. E. Betts, Assimilation and Association in French Colonial Theory (New York:
Columbia UniversityPress, 1961), p. 120. 37
W. K. Hancock, Survey of British Commonwealth Affairs, vol. 2, Problems of
EconomicPolicy 1918-1939, 2 pts. (London: Oxford University Press, 1942), pt. 2, p. 267.
Economic Developmentand Cultural Change
An interesting exception, though one that may prove the rule, is the Chinese nationalist leader, Sun Yat-sen. In 1922, he published (in English) a remarkable book on The InternationalDevelopmentof China, in which he proposed a massive program for the economic development of China with the aid of foreign capital. In breadth of imagination, it anticipates by a generation much of the post-1945 literature on economic development. "China must not only regulate private capital, but she must also develop state capital and promote industry.., .build means of production, railroads and waterways, on a large scale. Open new mines.., .hasten to foster manufacturing."38The reason for questioning whether Sun Yat-sen should be regardedas an exception is partly that his thinking was probably influenced by the October Revolution in Russia and thus indirectly by the Marxist tradition39and partly that his use of "economic development" is, after all, closer to that of Milner than of Marx: "The natural resources of China are great and their proper development could create an unlimited market for the whole world."40 Another exception, outside the mainstream of economic writing in the English language, was the use of "economic development" in Australia (and probably the other Dominions) where the distinction between the transitive and intransitive meanings became blurred to the point of obliteration. When, in 1931, D. B. Copland edited a special issue on Australia for The Annals of the American Academy of Political and Social Science, he referred to it as "a survey of recent trends in Australian economic development," and he wrote in the last chapter that "by the end of 1929 Australia had reached the close of a period of rapid development and high prosperity" and that the growth of Australian manufacturing production during the years 1913-26 had represented "a natural development in a country that had first pursued primary production," though "somewhat forced."41In such passages, neither he nor his readers, one suspects, were any longer conscious of the transitive, as contrasted with the intransitive, meaning; during the 1930s, "economic development" was constantly used in Australia, and increasingly elsewhere, in this ambivalent sense. In 1939, Eugene Staley, starting where Sun Yat-sen had left off, 38 Sun Yat-sen, The International Development of China (New York: G. P.
Putnam'sSons, 1922),p. 8. 39Sun Yat-sen had expounded his grandiose ideas for railway developmentin China before World War I, and although the book was not publisheduntil 1922, 2 yearsaftera visit to the Soviet Union, it was basedon lectureshe gave in 1918.But even at that time, what was happeningin Russia made as great an impressionon him as news of the GreatLeap Forwardin Chinawas to makeon Indianopinion 40 yearslater. 40 Sun Yat-sen, p. 5.
41D. B. Copland, "The National Income and Economic Prosperity,"An Eco-
nomic Survey of Australia, in Annals of the American Academy of Political and Social
Science 158 (November 1931):v, 260.
H. W. Arndt
proposed a "world development plan."42After the outbreak of war, the idea was taken up by many others in the spate of plans for the postwar world.43Another former member of the ILO secretariat, Wilfred Benson, was probably the first to speak in 1942 of "underdeveloped areas" in the postwar sense,44 and in 1944 Rosenstein-Rodan expounded his ideas for "The International Development of Economically Backward Areas."45 In the immediate postwar years, "economic development" became virtually synonymous with growth in per capita income in the less developed countries. Arthur Lewis in 1944 declared the object of a program of rapid economic development to be to "narrow the gap" in per capita income between rich and poor countries.46One of the first United Nations documents on development plans stated in 1947 that "the governments' ultimate aim in economic development is to raise the national welfare of the entire population."47 Lewis's great book on economic development appeared in 1955 under the title The Theory of Economic Growth,and in Rostow's hands Marx's stages of economic development became The Stages of Economic Growth.48Gunnar Myrdal was merely reflecting established usage when, in 1957, he referredto "the definition of economic development as a rise in the levels of living of the common people."49 A few years earlier, Hla Myint had made an attempt to reverse the trend. Protesting against the practice of crystallizing "low income per head" into the definition of backward countries, he proposed a return to the earlier distinction between "underdeveloped" natural resources and "backward" peoples.50He thought it "more illuminating ... to give these terms different connotations by using the former to mean underdeveloped resources, and the latter to refer to the backwardpeople of a given area,"51 fundamentally because he agreed with Furnivall that efficient development 42 Eugene Staley, World Economy in Transition (New York: Council on Foreign
Relations, 1939),p. 68.
43 See H. W. Arndt, "Development Economics before 1945," in Development and Planning: Essays in Honour of Paul Rosenstein-Rodan, ed. J. Bhagwati and R. Eckaus
(London: Allen & Unwin, 1972), pp. 24-29. 44 W. Benson, "The Economic Advancementof UnderdevelopedAreas," in The EconomicBasis of Peace (London: National Peace Council, 1942), p. 10. 45P. N. Rosenstein-Rodan,"The InternationalDevelopment of Economically
Backward Areas," International Affairs 20 (April 1944): 157-65.
46W. A. Lewis, "An Economic Plan for Jamaica,"Agenda4 (November 1944): 47 United Nations, Economic Development in Selected Countries: Plans, Pro-
grammesand Agencies(New York: United Nations, October 1947), p. xv. 48 W. A. Lewis, The Theory of Economic Growth (London: Allen & Unwin, 1955); W. W. Rostow, The Stages of Economic Growth (Cambridge: Cambridge Uni-
49 Gunnar Myrdal, Economic Theory and Under-developed Regions (London:
Gerald Duckworth & Co., 1957), p. 80. 50 Hla Myint, "An Interpretationof EconomicBackwardness,"OxfordEconomic Papers, n.s. 6 (June 1954): 132-63. 51Ibid., p. 132 (italics in original).
Economic Developmentand Cultural Change
of natural resources does not necessarily reduce the backwardness of people.52 But it was too late. Before long, standard textbooks defined
economic development as "a sustained, secular improvement in material well-being, ... reflected in an increasing flow of goods and services"53or even announced right at the start that "the terms 'economic development' and 'economic growth' will be used to refer to a sustained increase in per capita income."54 What many development economists have tried to do in the last 20 years is to get away from this identification of "economic development" with "economic growth." One form this endeavor has taken is to breathe into "development" some of the Hegelian connotations that had got lost on the way. 52 Ibid., p. 134. B. Okun and R. W. Richardson,eds., Studies in Economic Development (New
York: Holt, Rinehart& Winston, 1961), p. 230.
54D. A. Baldwin, Economic Development and American Foreign Policy, 1943-62
(Chicago: Universityof Chicago Press, 1966), p. 1.