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
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Economic Development:
A Semantic History
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 eco- nomics, as contrasted with its use in mathematics, biology, music, or photography. Nor, incidentally, is there an entry on "economic develop- ment" 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.2 When Colin Clark in 1940 published his monumental compara- tive 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 capi- talism, 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 Wealth of Nations, ed. E. Cannan, 2 vols. (1776; reprint ed., London: University Paperbacks, 1961), 1:367.
2 For quotations from 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:
Longman Cheshire, 1978), chap. 2.
3 Colin Clark, The Conditions of Economic Progress (London: Macmillan Pub-
lishing Co., 1940); A. C. Pigou, ed., Memorials of Alfred Marshall (London: Macmillan Publishing Co., 1925), p. vii.
4 A. Marshall, Principles of Economics, 2 vols., 9th ed. (London: Macmillan
Publishing Co., 1961), 1, appendix A:723.
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 "modern- ization" 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 litera- ture, 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 wirtschaftlichen Entwicklung, was not translated into English until 1934.7 A second exception is the use of the term "eco- nomic 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 Development of India.9 Another 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 Economic Studies, vol. 46 (Cambridge, Mass.: Harvard University Press, 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).
H. W. Arndt
459
1887.
The preface
to the first German
edition
contains
the famous
state-
ment
that "it is not a question
of the higher
or lower
degree
of development
of the social antagonisms
that result
from the natural
laws of capitalist
production.
It is a question
of these laws themselves,
of these tendencies
working
with iron necessity
towards
inevitable
results.
The country
that
is more developed
industrially
only shows, to the less developed,
the
image of its own future.""
Here, as in the subsequent
passage
when he
referred
to "the historical
circumstances
that prevented,
in Germany,
the
development
of the capitalist
mode of production,
and consequently
the
development,
in that country,
of modern
bourgeois
society,"12Marx
used
the word "development"
in the sense
in which
it forms
the key concept
of
his economic
interpretation
of history.
As Schumpeter
put it, in Marx's
schema
of thought, "Development
was.., .the central
theme.
And he concentrated
his analytical
powers
on
the task of showing
how the economic
process,
changing
itself by virtue of
its own inherent
logic, incessantly
changes
the social framework-the
whole of society in fact."'3
As has often been pointed
out, Marx
derived
his concept
of develop-
ment, including
the notion of phases or stages of development
which
unfold
in a dialectic
process
according
to an inexorable
law, from Hegel.
Hegel,
in turn, stood in a long tradition-from
Aristotle,
with his concept
of development
as the realization
of "potential"
matter
in "actual"
form,
to Fichte,
who was the first
to argue
that "history
proceeds
dialectically."14
Some of Hegel's formulations
strike notes strangely
familiar
to students
of recent
development
literature.
"The principle
of Development
involves
...
the existence
of a latent germ of being-a capacity or potentiality
striving
to realize
itself. .
.. The history
of the world
.
.is the process
of
development....
[This] development,
therefore,
does not present the
harmless
tranquility
of mere growth."l5
But it was Marx who gave
development
a specifically
economic
connotation.
Marx's notion of stages of economic development
is a constant
theme
in later Marxist
literature,
but it is difficult
to find references
in this
literature
to more or less "developed"
countries
or nations.
When the
Second Congress
of the Communist
International
of 1920 reached
the
important
conclusion
that, pace Marx, the capitalist
stage of economic
development
is not one through
which
all countries
must
pass, the distinc-
11 Karl Marx and Frederick Engels, Selected Works in Three Volumes (Moscow:
Progress Publishers, 1969), 2:87.
12 Ibid., p. 92.
13 J. A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 573.
14 For an account of this descent, see John Passmore, The Perfectibility of Man
(London: Gerald Duckworth & Co., 1970), chap. 11.
15 G. W. F. Hegel, The Philosophy of History (New York: Dover Publications,
1956), pp. 54-55. In the last sentence of the quotation, Hegel's Entwicklung was un- accountably translated in the English version as "expansion."
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 coun- tries, 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 con- siderably 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
16 Quoted in Helkne Carrere d'Encausse and S. R. Schram, Marxism and Asia (London: Penguin Press, 1969), p. 159. The original text was presumably in Russian, but there is no reason to doubt that these words were accurately translated.
17 Knowles, p. vii.
18 Quoted in F. D. Lugard, The Dual Mandate in British Tropical Africa (Edin- burgh: William Blackwood & Sons, 1921), p. 489.
19 "Economic development" in the intransitive sense had another potential source besides the line of thought that led from Hegel to Marx and Schumpeter, but its contribution was virtually stillborn and deserves only a footnote: This was the biological theory of evolution. Some years before Darwin's Origin of 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," reprinted in H. Spencer, Essays, Scientific, Political and Speculative, 3 vols. [London: Williams & Norgate, 1891], vol. 1.) He argued that social progress was more than "simple growth"; rather, like the evolution of a biological organism, it was an "evolution of the simple into the complex." At one point he mentioned that "it has not been by command of any ruler that some men have become manufacturers, while others have remained cultivators ... it has arisen under the pressure of human wants" (Spencer, pp. 8, 10, 266). However, he did not pursue the idea any further. The only economist to take it up appears to have
H. W. Arndt 461
The origins of the transitive concept of economic development which,
by the 1920s, was in fairly common use in the specialist British literature of colonial history and policy are to be found, not in nineteenth-century
British (or American) writings about economics and economic history but
in Australian (and to a lesser extent, Canadian) writings, and they go a
long way back. The directors of the Van Dieman's Land Company, which
held large tracts of land on the Australian mainland, expressed in their thirteenth annual report of 1838 the dominant local opinion about the needs of the young colonies: "Population is the only thing wanted to develop the Company's locations."20 A colonial politician made the same point a few years later, in 1845, in the Legislative Council of New South Wales: "The resources of a new country can only be developed by constant additions to its population."21 The case for construction of railways was put in similar terms in 1854--"The best and most economical means of developing the vast resources of the interior"22--and in 1861 one Charles
Mayes in Melbourne published a pamphlet, entitled Essay on the Manu-
factures More Immediately Required for the Economic Development of the
Resources of the Colony,23 which the Oxford English Dictionary in its next edition might well list as the earliest (so far) known use of the term "econo- mic development."
In Canada, too, as early as 1846, the Canadian Economist argued that
"Canada is now thrown upon her own resources, and if she wishes to prosper, these resources must be developed."24 But whereas in Australia
the transitive use of "development" was continuous and common from
the middle of the nineteenth century onward,25s-side by side with syn-
been the Australian, W. E. Hearn, whose Plutology (Melbourne: George Robertson, 1863) received honorable mentions by Jevons and Marshall. In a chapter on "The Industrial Evolution of Society," he expounded the Spencerian analogy. The evolution of both an individual and a society "consists in, or at least is invariably attended by, an increase of bulk, a greater complexity of structure." He used the idea to support a case for balanced growth between agriculture and industry: "In societies as in organ- isms, growth and development, increased bulk and increased complexity of structure, ought always to proceed with equal pace." He also, apparently unconscious of any inconsistency, introduced it in support of his laissez-faire principles: "Every attempt to interfere with the ordinary development of a country," e.g., by protecting some industries or restraining others, "tends to produce uniformity in the occupations of that country and so to arrest its development and retard its 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 Darwinists in the United States and elsewhere who were more inter- ested in the survival of the fittest.
20 Quoted in S. H. Roberts, History of Australian Land Settlement (Melbourne:
Melbourne University Press, 1924), p. 68.
21 Quoted in C. D. W. Goodwin, Economic Enquiry in Australia (Durham, N.C.: Duke University Press, 1966), p. 423.
22 Quoted in ibid., p. 269. 23 Quoted in ibid., p. 318.
24 Quoted in H. A. Innis and A. R. M. Lower, Select Documents in Canadian Economic History 1783-1885 (Toronto: University of Toronto Press, 1933), p. 303.
onyms such as "opening up our natural resources"26 or "the steady occu- pancy 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, manu- facturing, banking, and other enterprises grew, within (and sometimes without) legal rules made by government. In Australia's hostile environ- ment, 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 Development and Welfare
Development of natural resources was not always viewed as a task of government. The British authority on colonial policy, J. S. Furnivall, referred to "the development of the material resources of Burma through trade and economic enterprise,"31 and 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 exploita-
26 E.g., ibid., pp. 282, 318.
27 Latrobe, lieutenant-governor of Victoria (1851), quoted in Roberts, p. 287, The fact that these synonyms began to be displaced by "development" in the 1830s and 1840s may be explained by the vogue which ideas of evolution and development were enjoying about that time in natural sciences, such as biology and geology; the Oxford English Dictionary cites uses in more general literature in the same period, e.g., Harriet Martineau (1834), Dickens (1837), Emerson (1841), and Newman (1845).
28 Thus the word "development" does not occur once in two works about aspects of nineteenth-century economic history in the United States, railway policy and public lands policy, the Australian counterparts of which use it constantly (see S. L. Miller, Inland Transportation [New York: McGraw-Hill Book 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.
30 Ibid., p. 197.
31 J. S. Furnivall, An Introduction to the Political Economy of Burma, 3d ed.
H. W. Arndt 463 tion of its resources]."32 But 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 accom- plished in the development of the material resources of the new land, and the social well-being of 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."35 One 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 economi- cally, 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: International Labour Office, 1937), p. 9.
33 See, 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). 35 Lugard (n. 18 above).
36 R. E. Betts, Assimilation and Association in French Colonial Theory (New York:
Columbia University Press, 1961), p. 120.
37 W. K. Hancock, Survey of British Commonwealth Affairs, vol. 2, Problems of
Economic Policy 1918-1939, 2 pts. (London: Oxford University Press, 1942), pt. 2, p. 267.
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 International Development of 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, rail- roads and waterways, on a large scale. Open new mines.., .hasten to foster manufacturing."38 The reason for questioning whether Sun Yat-sen should be regarded as an exception is partly that his thinking was probably influenced by the October Revolution in Russia and thus indirectly by the Marxist tradition39 and 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 develop- ment and high prosperity" and that the growth of Australian manufac- turing production during the years 1913-26 had represented "a natural development in a country that had first pursued primary production," though "somewhat forced."41 In 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's Sons, 1922), p. 8.
39 Sun Yat-sen had expounded his grandiose ideas for railway development in China before World War I, and although the book was not published until 1922, 2 years after a visit to the Soviet Union, it was based on lectures he gave in 1918. But even at that time, what was happening in Russia made as great an impression on him as news of the Great Leap Forward in China was to make on Indian opinion 40 years later.
40 Sun Yat-sen, p. 5.
41 D. B. Copland, "The National Income and Economic Prosperity," An Eco-
nomic Survey of Australia, in Annals of the American Academy of Political and Social
H. W. Arndt 465 proposed a "world development plan."42 After the outbreak of war, the idea was taken up by many others in the spate of plans for the postwar world.43 Another 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 de- veloped 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.46 One 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.48 Gunnar Myrdal was merely reflecting established usage when, in 1957, he referred to "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.50 He 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 backward people 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 Advancement of Underdeveloped Areas," in The
Economic Basis of Peace (London: National Peace Council, 1942), p. 10.
45 P. N. Rosenstein-Rodan, "The International Development of Economically
Backward Areas," International Affairs 20 (April 1944): 157-65.
46 W. A. Lewis, "An Economic Plan for Jamaica," Agenda 4 (November 1944): 156.
47 United Nations, Economic Development in Selected Countries: Plans, Pro-
grammes and 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-
versity Press, 1960).
49 Gunnar Myrdal, Economic Theory and Under-developed Regions (London:
Gerald Duckworth & Co., 1957), p. 80.
50 Hla Myint, "An Interpretation of Economic Backwardness," Oxford Economic
Papers, n.s. 6 (June 1954): 132-63.
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"53 or 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.
53 B. Okun and R. W. Richardson, eds., Studies in Economic Development (New York: Holt, Rinehart & Winston, 1961), p. 230.
54 D. A. Baldwin, Economic Development and American Foreign Policy, 1943-62