THE STAGES OF ECONOMIC GROWTH

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• Document Creation Date: November 17, 2016
• Document Release Date: July 16, 1998
• Sequence Number: 1
• Publication Date: January 1, 1960
• Content Type: BOOK

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ECOIIO Mic
Grow
A Non-Communist Manifesto
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THE STAGES OF
ECONOMIC GROWTH
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THE STAGES OF
ECONOMIC GROWTH
A NON-COMMUNIST MANIFESTO
W. W. ROSTOW
Professor of Economic History
Massachusetts Institute of Technology
CAMBRIDGE
AT THE UNIVERSITY PRESS
i96o
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PUBLISHED BY
THE SYNDICS OF THE CAMBRIDGE UNIVERSITY PRESS
Bentley House, Zoo Euston Road, London, N.W. i
American Branch: 32, East 57th Street, New York 22, N.Y.
CAMBRIDGE UNIVERSITY PRESS
rg6o
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TO
ALISON, TATIANA AND
WILLIAM ROSE
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CONTENTS
Preface page ix
I INTRODUCTION I
2 THE FIVE STAGES-OF-GROWTH-A SUMMARY 4
The traditional society. The preconditions for take-off. The take-off.
The drive to maturity. The age of high mass-consumption. Beyond
consumption. A dynamic theory of production
THE PRECONDITIONS FOR TAKE-OFF 17
The two cases. The nature of the transition. The analysis of the
transition. Two sectoral problems. Agriculture and the extractive
industries. Social overhead capital. Non-economic change. The
transitional coalitions. The alternative directions of nationalism.
The first take-off
THE TAKE-OFF
The achievement of regular growth. The take-off defined and isolated.
Evidence on investment-rates in the take-off. The inner structure of
the take-off. The supply of loanable funds. The sources of entre-
preneurship. Leading sectors in the take-off. The take-off in
perspective
THE DRIVE TO MATURITY
Definition and timing. Sectoral patterns of maturity: railways and
their aftermath. Sweden. Japan. Russia. Some problems in
defining maturity. Maturity in perspective
6 THE AGE OF HIGH MASS-CONSUMPTION
The three-way choice. The American case, Phase One: The Progres-
sive era, 19o1-16. Phase Two: The 5920's. Phase Three: The Great
Depression. Phase four: The Post-War Boom. Phase Five: Where
next? Post-maturity elsewhere: Pre-1914. The sg2o's. The 1930's.
Post-1945. The terms of trade after two wars. Beyond high mass-
consumption
RUSSIAN AND AMERICAN GROWTH
A remarkable parallel. The major differences. The military question.
The economic question. The locus of the challenge
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Contents
8 RELATIVE STAGES-OF-GROWTH AND
AGGRESSION page io6
War in modern history. The problem of national sovereignty. Three
kinds of wars. Colonialism. Regional aggression. Struggles for the
Eurasian power balance. The choice of aggression. The next phase:
Nuclear weapons and the further spread of industrialization
THE RELATIVE STAGES-OF-GROWTH AND THE
PROBLEM OF PEACE
The revolution in weapons. The diffusion of power in the longer run.
The problem of peace. The Russian national interest. Moscow's
problem of acceptance. The great act of persuasion. Beyond peace.
The significance of the diffusion of power for Western Europe.
Take-offs, past and present. Similarities. Some relative differences.
Some relative advantages. Three major implications for policy
10 MARXISM, COMMUNISM, AND THE STAGES-OF-
GROWTH
The seven Marxist propositions. Similarities with stages-of-growth
analysis. Central themes of stages-of-growth. Marx in perspective.
The evolution of modern Communism. Communism: A disease of
the transition. A statement of values
Appendix: THE DIFFUSION OF THE PRIVATE
AUTOMOBILE
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This book is the product of both a highly spontaneous and a highly
protracted effort.
Proximately, it derives from a set of lectures prepared and deli-
vered at Cambridge University in the autumn of 1958. While there
on sabbatical leave from M.I.T., I was invited by the Faculty of
Economics and Politics to present views on `The Process of Indus-
trialization' to an undergraduate audience. This book emerged
directly from the effort to respond to that invitation, bearing still
the marks of the occasion in its informality and non-technical
character.
On the other hand the book fulfils, at least ad interim, a decision
made when I was an undergraduate at Yale, in the mid-1930's.
At that time I decided to work professionally on two problems: the
relatively narrow problem of bringing modern economic theory to
bear on economic history; and the broader problem of relating
economic to social and political forces, in the workings of whole
societies. As a student and teacher these two questions have engaged
me ever since.
Specifically, I found Marx's solution to the problem of linking
economic and non-economic behaviour-and the solutions of others
who had grappled with it-unsatisfactory, without then feeling pre-
pared to offer an alternative. Over the intervening years I explored
facets of the relationship: in work on Britain of the nineteenth
century; in teaching American history at Oxford and Cambridge;
in studies of modern Russia, China, and the United States; and
in elaborating general views on the process of economic growth.
In addition, the experience of working from time to time on prob-
lems of military and foreign policy added some illumination. This
book unifies what I have thus far learned about the central problem
from all these directions.
The views presented here might have been elaborated, in a more
conventional treatise, at greater length, in greater detail, and with
greater professional refinement. But there may be some virtue in
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Preface
articulating new ideas briefly and simply to an intelligent non-
professional audience. There are devices of obscurity and diver-
sionary temptations that are denied the teacher of undergraduates.
In any case, I owe a real debt to the lively and challenging students
at Cambridge who came to hear the lectures, and whose response
gave the enterprise an authentic air of intellectual adventure.
Chapter 4 is substantially reprinted, with excisions, from `The
Take-off into Self-Sustained Growth', published in the Economic
Journal, March 1956, and here included with the kind permission
of the editors.
I am in the debt of others as well, in Cambridge and beyond, who
commented on this set of ideas. I should wish to thank, in particu-
lar, Lawrence Barss, Kenneth Berrill, Denis Brogan, Richard
Goodwin, Richard Hofstadter, Richard Kahn, Albert Kervyn, W. J.
Macpherson, Gunnar Myrdal, M. M. Postan, E. A. Radice, C.
Raphael, Sir Dennis Robertson, Joan Robinson, George Rosen,
P. N. Rosenstein-Rodan, Arthur Schlesinger, Sr, Charles Wilson,
and the staff of The Economist for observations which, whether
wholly accepted or not, proved extremely helpful.
I owe a quite specific and substantial debt to my wife, Elspeth
Davies Rostow. While I was working in the summer of 1957 on
a study of recent American military and foreign policy, she insisted
that it was necessary to bring to bear the insights that economic
history might afford. It was directly from that injunction, and from
the protracted dialogue that followed, that the full sequence of
stages-of-growth first fell into place, as well as certain of the con-
temporary applications here developed in chapters 7-9.
A longer-term and more diffuse debt is owed to my colleagues at
M.I.T., who generously commented on various segments of this
argument as they were formulated and, notably, to the students in
my graduate seminar in economic history since 1950, who actively
shared in the creation of this structure of thought.
The preparation of this book was rendered both pleasant and easy
by the facilities made available to me by the Faculty of Economics
and Politics at Cambridge and those who run the Marshall Library.
Their willingness to assist a transient teacher, in the midst of their
urgent responsibilities, was memorable.
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Preface
The charts in chapter 6, illustrating the diffusion of the private
automobile, and the supporting data presented in the Appendix,
are the work of John Longden, who most generously turned from
his own work to help dramatize that portion of the argument.
Finally, I would wish to thank those at M.I.T. who granted me
a sabbatical year, and the Carnegie Corporation, which offered the
freedom and resources of a Reflective Year Grant. It is not easy,
in contemporary academic life, to find a setting where one can con-
centrate one's attention wholly on the elaboration of a single line of
thought.
MARSHALL LIBRARY
CAMBRIDGE
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France
USA
Germany
Sweden
Japan
Russia
Canada
Turkey
Argentina
Mexico
China
India
Chart of the stages of economic growth in selected countries. Note that Canada and
Australia have entered the stage of high mass-consumption before reaching maturity.
[By courtesy of the Economist.]
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INTRODUCTION
This book presents an economic historian's way of generalizing the
sweep of modern history. The form of this generalization is a set
of stages-of-growth.
I have gradually come to the view that it is possible and, for
certain limited purposes, it is useful to break down the story of
each national economy-and sometimes the story of regions-
according to this set of stages. They constitute, in the end, both
a theory about economic growth and a more geneial, if still highly
partial, theory about modern history as a whole.
But any way of looking at things that pretends to bring within
its orbit, let us say, significant aspects of late eighteenth-century
Britain and Khrushchev's Russia; Meiji Japan and Canada of the
pre-1914 railway boom; Alexander Hamilton's United States and
Mao's China; Bismarck's Germany and Nasser's Egypt-any such
scheme is bound, to put it mildly, to have certain limitations.
I cannot emphasize too strongly at the outset, that the stages-of-
growth are an arbitrary and limited way of looking at the sequence
of modern history: and they are, in no absolute sense, a correct
way. They are designed, in fact, to dramatize not merely the uni-
formities in the sequence of modernization but also-and equally-
the uniqueness of each nation's experience.
As Croce said in discussing the limits of historical materialism:
.. whilst it is possible to reduce to general concepts the particular
factors of reality which appear in history... it is not possible to
work up into general concepts the single complex whole formed
by these factors'.* We shall be concerned here, then, with certain
` particular factors of reality' which appear to run through the story
of the modern world since about 1700.
Having accepted and emphasized the limited nature of the enter-
prise, it should be noted that the stages-of-growth are designed
* B. Croce, Historical Materialism and the Economics of Karl Marx, tr. C. M. Meredith
(London), pp. 3-4.
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Introduction
to grapple with a quite substantial range of issues. Under what
impulses did traditional, agricultural societies begin the process of
their modernization? When and how did regular growth come to
be a built-in feature of each society? What forces drove the process
of sustained growth along and determined its contours? What com-
mon social and political features of the growth process may be dis-
cerned at each stage? And in which directions did the uniqueness of
each society express itself at each stage? What forces have determined
the relations between the more developed and less developed areas; and
what relation, if any, did the relative sequence of growth bear to the out-
break of war? And, finally, where is compound interest* taking us? Is
it taking us to Communism; or to the affluent suburbs, nicely rounded
out with social overhead capital; to destruction; to the moon; or where?
The stages-of-growth are designed to get at these matters; and,
since they constitute an alternative to Karl Marx's theory of modern
history, I have given over the final chapter to a comparison between
his way of looking at things and mine.
But this should be clear: although the stages-of-growth are an
economic way of looking at whole societies, they in no sense imply
that the worlds of politics, social organization, and of culture are
a mere superstructure built upon and derived uniquely from the
economy. On the contrary, we accept from the beginning the
perception on which Marx, in the end, turned his back and which
Engels was only willing to acknowledge whole-heartedly as a very
old man; namely, that societies are interacting organisms. While
it is true that economic change has political and social consequence,
economic change is, itself, viewed here as the consequence of
political and social as well as narrowly economic forces. And in
terms of human motivation, many of the most profound economic
changes are viewed as the consequence of non-economic human
motives and aspirations. The student of economic growth concerned
with its foundation in human motivation should never forget
Keynes's dictum: `If human nature felt no temptation to take a
chance no satisfaction (profit apart) in constructing a factory, a rail-
* This phrase is used as a shorthand way of suggesting that growth normally
proceeds by geometric progression, much as a savings account if interest is left to
compound with principal.
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Introduction
way, a mine or a farm, there might not be much investment merely
as a result of cold calculation.'*
The exposition begins with an impressionistic definition of the
five major stages-of-growth and a brief statement of the dynamic
theory of production which is their bone-structure. The four chap-
ters that follow consider more analytically, and illustrate from
history and from contemporary experience, the stages beyond the
traditional society : the preconditions period, the take-off, maturity,
and the period of diffusion on a mass basis of durable consumers'
goods and services.
Chapter 7 examines the comparative patterns of growth of Russia
and the United States over the past century, a matter of both his-
torical and contemporary interest.
Chapter 8 applies the stages-of-growth to the question of aggres-
sion and war, down to the early 1950's, the question conventionally
raised under the rubric of imperialism.
Chapter 9 carries forward this analysis of the relation between
growth and war into the future, considering the nature of the problem
of peace, when examined from the perspective of the stages-of-
growth.
And, finally, in chapter io we examine explicitly the relationship
between the stages-of-growth and the Marxist system.
Now, then, what are these stages-of-growth?
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THE FIVE STAGES-OF-GROWTH-
A SUMMARY
It is possible to identify all societies, in their economic dimensions,
as lying within one of five categories: the traditional society, the
preconditions for take-off, the take-off, the drive to maturity, and
the age of high mass-consumption.
THE TRADITIONAL SOCIETY
First, the traditional society. A traditional society is one whose
structure is developed within limited production functions, based
on pre-Newtonian science and technology, and on pre-Newtonian
attitudes towards the physical world. Newton is here used as
a symbol for that watershed in history when men came widely to
believe that the external world was subject to a few knowable laws,
and was systematically capable of productive manipulation.
The conception of the traditional society is, however, in no sense
static; and it would not exclude increases in output. Acreage could
be expanded; some ad hoc technical innovations, often highly pro-
ductive innovations, could be introduced in trade, industry and
agriculture; productivity could rise with, for example, the improve-
ment of irrigation works or the discovery and diffusion of a new
crop. But the central fact about the traditional society was that
a ceiling existed on the level of attainable output per head. This
ceiling resulted from the fact that the potentialities which flow from
modern science and technology were either not available or not
regularly and systematically applied.
Both in the longer past and in recent times the story of traditional
societies was thus a story of endless change. The area and volume
of trade within them and between them fluctuated, for example,
with the degree of political and social turbulence, the efficiency of
central rule, the upkeep of the roads. Population-and, within
limits, the level of life-rose and fell not only with the sequence
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The traditional society
of the harvests, but with the incidence of war and of plague. Varying
degrees of manufacture developed; but, as in agriculture, the level
of productivity was limited by the inaccessibility of modern science,
its applications, and its frame of mind.
Generally speaking, these societies, because of the limitation on
productivity, had to devote a very high proportion of their resources
to agriculture; and flowing from the agricultural system there was
an hierarchical social structure, with relatively narrow scope-but
some scope-for vertical mobility. Family and clan connexions
played a large role in social organization. The value system of these
societies was generally geared to what might be called a long-run
fatalism; that is, the assumption that the range of possibilities open
to one's grandchildren would be just about what it had been for
one's grandparents. But this long-run fatalism by no means excluded
the short-run option that, within a considerable range, it was pos-
sible and legitimate for the individual to strive to improve his lot,
within his lifetime. In Chinese villages, for example, there was an
endless struggle to acquire or to avoid losing land, yielding a situa-
tion where land rarely remained within the same family for a century.
Although central political rule-in one form or another-often
existed in traditional societies, transcending the relatively self-
sufficient regions, the centre of gravity of political power generally
lay in the regions, in the hands of those who owned or controlled
the land. The landowner maintained fluctuating but usually pro-
found influence over such central political power as existed, backed
by its entourage of civil servants and soldiers, imbued with attitudes
and controlled by interests transcending the regions.
In terms of history then, with the phrase `traditional society'
we are grouping the whole pre-Newtonian world : the dynasties in
China; the civilization of the Middle East and the Mediterranean;
the world of medieval Europe. And to them we add the post-
Newtonian societies which, for a time, remained untouched or
unmoved by man's new capability for regularly manipulating his
environment to his economic advantage.
To place these infinitely various, changing societies in a single
category, on the ground that they all shared a ceiling on the produc-
tivity of their economic techniques, is to say very little indeed. But
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The five stages-of-growth-a summary
we are, after all, merely clearing the way in order to get at the
subject of this book; that is, the post-traditional societies, in which
each of the major characteristics of the traditional society was
altered in such ways as to permit regular growth : its politics, social
structure, and (to a degree) its values, as well as its economy.
THE PRECONDITIONS FOR TAKE-OFF
The second stage of growth embraces societies in the process of
transition; that is, the period when the preconditions for take-off
are developed; for it takes time to transform a traditional society
in the ways necessary for it to exploit the fruits of modern science,
to fend off diminishing returns, and thus to enjoy the blessings and
choices opened up by the march of compound interest.
The preconditions for take-off were initially developed, in a clearly
marked way, in Western Europe of the late seventeenth and early
eighteenth centuries as the insights of modern science began to be
translated into new production functions in both agriculture and
industry, in a setting given dynamism by the lateral expansion of
world markets and the international competition for them. But
all that lies behind the break-up of the Middle Ages is relevant to
the creation of the preconditions for take-off in Western Europe.
Among the Western European states, Britain, favoured by geography,
natural resources, trading possibilities, social and political structure,
was the first to develop fully the preconditions for take-off.
The more general case in modern history, however, saw the stage
of preconditions arise not endogenously but from some external
intrusion by more advanced societies. These invasions-literal or
figurative-shocked the traditional society and began or hastened
its undoing; but they also set in motion ideas and sentiments which
initiated the process by which a modern alternative to the traditional
society was constructed out of the old culture.
The idea spreads not merely that economic progress is possible,
but that economic progress is a necessary condition for some other
purpose, judged to be good : be it national dignity, private profit,
the general welfare, or a better life for the children. Education, for
some at least, broadens and changes to suit the needs of modern
economic activity. New types of enterprising men come forward-
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The preconditions for take-off
in the private economy, in government, or both-willing to mobilize
savings and to take risks in pursuit of profit or modernization.
Banks and other institutions for mobilizing capital appear. Invest-
ment increases, notably in transport, communications, and in raw
materials in which other nations may have an economic interest.
The scope of commerce, internal and external, widens. And, here
and there, modern manufacturing enterprise appears, using the new
methods. But all this activity proceeds at a limited pace within
an economy and a society still mainly characterized by traditional
low-productivity methods, by the old social structure and values,
and by the regionally based political institutions that developed in
conjunction with them.
In many recent cases, for example, the traditional society per-
sisted side by side with modern economic activities, conducted for
limited economic purposes by a colonial or quasi-colonial power.
Although the period of transition-between the traditional society
and the take-off-saw major changes in both the economy itself
and in the balance of social values, a decisive feature was often
political. Politically, the building of an effective centralized national
state-on the basis of coalitions touched with a new nationalism,
in opposition to the traditional landed regional interests, the
colonial power, or both, was a decisive aspect of the preconditions
period; and it was, almost universally, a necessary condition for
take-off.
There is a great deal more that needs to be said about the pre-
conditions period, but we shall leave it for chapter 3, where the
anatomy of the transition from a traditional to a modern society
is examined.
THE TAKE-OFF
We come now to the great watershed in the life of modern societies:
the third stage in this sequence, the take-off. The take-off is the
interval when the old blocks and resistances to steady growth are
finally overcome. The forces making for economic progress, which
yielded limited bursts and enclaves of modern activity, expand and
come to dominate the society. Growth becomes its normal condi-
tion. Compound interest becomes built, as it were, into its habits
and institutional structure.
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The five stages-of-growth-a summary
In Britain and the well-endowed parts of the world populated
substantially from Britain (the United States, Canada etc.) the
proximate stimulus for take-off was mainly (but not wholly) techno-
logical. In the more general case, the take-off awaited not only the
build-up of social overhead capital and a surge of technological
development in industry and agriculture, but also the emergence
to political power of a group prepared to regard the modernization
of the economy as serious, high-order political business.
During the take-off, the rate of effective investment and savings
may rise from, say, 5% of the national income to io% or more;
although where heavy social overhead capital investment was required
to create the technical preconditions for take-off the investment rate
in the preconditions period could be higher than 5 %, as, for example,
in Canada before the i 89o's and Argentina before 1914. In such cases
capital imports usually formed a high proportion of total investment
in the preconditions period and sometimes even during the take-off
itself, as in Russia and Canada during their pre-1914 railway booms.
During the take-off new industries expand rapidly, yielding profits
a large proportion of which are reinvested in new plant; and these
new industries, in turn, stimulate, through their rapidly expanding
requirement for factory workers, the services to support them, and
for other manufactured goods, a further expansion in urban areas
and in other modern industrial plants. The whole process of expan-
sion in the modern sector yields an increase of income in the hands
of those who not only save at high rates but place their savings at
the disposal of those engaged in modern sector activities. The new
class of entrepreneurs expands; and it directs the enlarging flows
of investment in the private sector. The economy exploits hitherto
unused natural resources and methods of production.
New techniques spread in agriculture as well as industry, as
agriculture is commercialized, and increasing numbers of farmers
are prepared to accept the new methods and the deep changes they
bring to ways of life. The revolutionary changes in agricultural
productivity are an essential condition for successful take-off; for
modernization of a society increases radically its bill for agricultural
products. In a decade or two both the basic structure of the economy
and the social and political structure of the society are transformed
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The take-off
in such a way that a steady rate of growth can be, thereafter,
regularly sustained.
As indicated in chapter 4, one can approximately allocate the
take-off of Britain to the two decades after 1783; France and the
United States to the several decades preceding 186o; Germany,
the third quarter of the nineteenth century; Japan, the fourth quarter
of the nineteenth century; Russia and Canada the quarter-century
or so preceding 1914; while during the 1950's India and China
have, in quite different ways, launched their respective take-offs.
THE DRIVE TO MATURITY
After take-off there follows a long interval of sustained if fluctuating
progress, as the now regularly growing economy drives to extend
modern technology over the whole front of its economic activity.
Some 10-20 % of the national income is steadily invested, permitting
output regularly to outstrip the increase in population. The make-up
of the economy changes unceasingly as technique improves, new
industries accelerate, older industries level off. The economy finds
its place in the international economy: goods formerly imported are
produced at home; new import requirements develop, and new export
commodities to match them. The society makes such terms as it will
with the requirements of modern efficient production, balancing off
the new against the older values and institutions, or revising the latter
in such ways as to support rather than to retard the growth process.
Some sixty years after take-off begins (say, forty years after the
end of take-off) what may be called maturity is generally attained.
The economy, focused during the take-off around a relatively narrow
complex of industry and technology, has extended its range into
more refined and technologically often more complex processes;
for example, there may be a shift in focus from the coal, iron, and
heavy engineering industries of the railway phase to machine-tools,
chemicals, and electrical equipment. This, for example, was the
transition through which Germany, Britain, France, and the United
States had passed by the end of the nineteenth century or shortly
thereafter. But there are other sectoral patterns which have been
followed in the sequence from take-off to maturity, which are
considered in chapter 5.
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The five stages-of-growth-a summary
Formally, we can define maturity as the stage in which an economy
demonstrates the capacity to move beyond the original industries
which powered its take-off and to absorb and to apply efficiently
over a very wide range of its resources-if not the whole range-
the most advanced fruits of (then) modern technology. This is the
stage in which an economy demonstrates that it has the technological
and entrepreneurial skills to produce not everything, but anything
that it chooses to produce. It may lack (like contemporary Sweden
and Switzerland, for example) the raw materials or other supply
conditions required to produce a given type of output economically;
but its dependence is a matter of economic choice or political priority
rather than a technological or institutional necessity.
Historically, it would appear that something like sixty years was
required to move a society from the beginning of take-off to maturity.
Analytically the explanation for some such interval may lie in the
powerful arithmetic of compound interest applied to the capital
stock, combined with the broader consequences for a society's
ability to absorb modern technology of three successive generations
living under a regime where growth is the normal condition. But,
clearly, no dogmatism is justified about the exact length of the
interval from take-off to maturity.
THE AGE OF HIGH MASS-CONSUMPTION
We come now to the age of high mass-consumption, where, in time,
the leading sectors shift towards durable consumers' goods and
services: a phase from which Americans are beginning to emerge;
whose not unequivocal joys Western Europe and Japan are begin-
ning energetically to probe; and with which Soviet society is engaged
in an uneasy flirtation.
As societies achieved maturity in the twentieth century two things
happened : real income per head rose to a point where a large number
of persons gained a command over consumption which transcended
basic food, shelter, and clothing; and the structure of the working
force changed in ways which increased not only the proportion of
urban to total population, but also the proportion of the population
working in offices or in skilled factory jobs-aware of and anxious
to acquire the consumption fruits of a mature economy.
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In addition to these economic changes, the society ceased to
accept the further extension of modern technology as an overriding
objective. It is in this post-maturity stage, for example, that,
through the political process, Western societies have chosen to
allocate increased resources to social welfare and security. The
emergence of the welfare state is one manifestation of a society's
moving beyond technical maturity; but it is also at this stage that
resources tend increasingly to be directed to the production of
consumers' durables and to the diffusion of services on a mass basis,
if consumers' sovereignty reigns. The sewing-machine, the bicycle,
and then the various electric-powered household gadgets were
gradually diffused. Historically, however, the decisive element has
been the cheap mass automobile with its quite revolutionary effects-
social as well as economic-on the life and expectations of society.
For the United States, the turning point was, perhaps, Henry
Ford's moving assembly line of 1913-14; but it was in the lgao's,
and again in the post-war decade, 1946-56, that this stage of growth
was pressed to, virtually, its logical conclusion. In the 1950's
Western Europe and Japan appear to have fully entered this phase,
accounting substantially for a momentum in their economies quite
unexpected in the immediate post-war years. The Soviet Union
is technically ready for this stage, and, by every sign, its citizens
hunger for it; but Communist leaders face difficult political and social
problems of adjustment if this stage is launched.
BEYOND CONSUMPTION
Beyond, it is impossible to predict, except perhaps to observe that
Americans, at least, have behaved in the past decade as if diminishing
relative marginal utility sets in, after a point, for durable consumers'
goods; and they have chosen, at the margin, larger families-
behaviour in the pattern of Buddenbrooks dynamics.* Americans
have behaved as if, having been born into a system that provided
economic security and high mass-consumption, they placed a lower
" In Thomas Mann's novel of three generations, the first sought money; the
second, born to money, sought social and civic position; the third, born to comfort
and family prestige, looked to the life of music. The phrase is designed to suggest,
then, the changing aspirations of generations, as they place a low value on what they
take for granted and seek new forms of satisfaction.
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valuation on acquiring additional increments of real income in the
conventional form as opposed to the advantages and values of an
enlarged family. But even in this adventure in generalization it is
a shade too soon to create-on the basis of one case-a new stage-
of-growth, based on babies, in succession to the age of consumers'
durables: as economists might say, the income-elasticity of demand
for babies may well vary from society to society. But it is true that the
implications of the baby boom along with the not wholly unrelated
deficit in social overhead capital are likely to dominate the American
economy over the next decade rather than the further diffusion of
consumers' durables.
Here then, in an impressionistic rather than an analytic way, are
the stages-of-growth which can be distinguished once a traditional
society begins its modernization: the transitional period when the
preconditions for take-off are created generally in response to the
intrusion of a foreign power, converging with certain domestic
forces making for modernization; the take-off itself; the sweep into
maturity generally taking up the life of about two further generations;
and then, finally, if the rise of income has matched the spread of
technological virtuosity (which, as we shall see, it need not imme-
diately do) the diversion of the fully mature economy to the provision
of durable consumers' goods and services (as well as the welfare
state) for its increasingly urban-and then suburban-population.
Beyond lies the question of whether or not secular spiritual stagna-
tion will arise, and, if it does, how man might fend it off: a matter
considered in chapter 6.
In the four chapters that follow we shall take a harder, and more
rigorous look at the preconditions, the take-off, the drive to maturity,
and the processes which have led to the age of high mass-consump-
tion. But even in this introductory chapter one characteristic of
this system should be made clear.
A DYNAMIC THEORY OF PRODUCTION
These stages are not merely descriptive. They are not merely a way
of generalizing certain factual observations about the sequence of
development of modern societies. They have an inner logic and
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continuity. They have an analytic bone-structure, rooted in a dynamic
theory of production.
The classical theory of production is formulated under essentially
static assumptions which. freeze-or permit only once-over change-
in the variables most relevant to the process of economic growth.
As modern economists have sought to merge classical production
theory with Keynesian income analysis they have introduced the
dynamic variables : population, technology, entrepreneurship etc.
But they have tended to do so in forms so rigid and general that
their models cannot grip the essential phenomena of growth, as
they appear to an economic historian. We require a dynamic theory of
production which isolates not only the distribution of income between
consumption, saving, and investment (and the balance of production
between consumers and capital goods) but which focuses directly and
in some detail on the composition of investment and on develop-
ments within particular sectors of the economy. The argument that
follows is based on such a flexible, disaggregated theory of production.
When the conventional limits on the theory of production are
widened, it is possible to define theoretical equilibrium positions
not only for output, investment, and consumption as a whole, but
for each sector of the economy.*
Within the framework set by forces determining the total level
of output, sectoral optimum positions are determined on the side
of demand, by the levels of income and of population, and by the
character of tastes; on the side of supply, by the" state of technology
and the quality of entrepreneurship, as the latter determines the
proportion of technically available and potentially profitable innova-
tions actually incorporated in the capital stock.f
In addition, one must introduce an extremely significant empirical
hypothesis: namely, that deceleration is the normal optimum path
of a sector, due to a variety of factors operating on it, from the side
of both supply and demand.$
* W.W. Rostow, The Process of Economic Growth (Oxford, 1953), especially chapter iv.
Also `Trends in the Allocation of Resources in Secular Growth', chapter 15 of Economic
Progress, ed. Leon H. Dupriez, with the assistance of Douglas C. Hague (Louvain, 1955).
f Ina closed model, a dynamic theory of production must account for changing stocks
of basic and applied science, as sectoral aspects of investment, which is done in The
Process of Economic Growth, especially pp. 22-5.
1 Process of Economic Growth, pp. 96-103.
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The equilibria which emerge from the application of these criteria
are a set of sectoral paths, from which flows, as first derivatives,
a sequence of optimum patterns of investment.
Historical patterns of investment did not, of course, exactly follow
these optimum patterns. They were distorted by imperfections in
the private investment process, by the policies of governments,
and by the impact of wars. Wars temporarily altered the profitable
directions of investment by setting up arbitrary demands and by
changing the conditions of supply; they destroyed capital; and,
occasionally, they accelerated the development of new technology
relevant to the peacetime economy and shifted the political and
social framework in ways conducive to peacetime growth.* The
historical sequence of business-cycles and trend-periods results
from these deviations of actual from optimal patterns; and such
fluctuations, along with the impact of wars, yield historical paths
of growth which differ from those which the optima, calculated
before the event, would have yielded.
Nevertheless, the economic history of growing societies takes
a part of its rude shape from the effort of societies to approximate
the optimum sectoral paths.
At any period of time, the rate of growth in the sectors will vary
greatly; and it is possible to isolate empirically certain leading sectors,
at early stages of their evolution, whose rapid rate of expansion
plays an essential direct and indirect role in maintaining the overall
momentum of the economy.- For some purposes it is useful to
characterize an economy in terms of its leading sectors; and a part
of the technical basis for the stages of growth lies in the changing
sequence of leading sectors. In essence it is the fact that sectors
tend to have a rapid growth-phase, early in their life, that makes it
possible and useful to regard economic history as a sequence of
stages rather than merely as a continuum, within which nature never
makes a jump.
The stages-of-growth also require, however, that elasticities of
demand be taken into account, and that this familiar concept be
* Process of Economic Growth, chapter vii, especially pp. 164-7.
t For a discussion of the leading sectors, their direct and indirect consequences, and
the diverse routes of their impact, see `Trends in the Allocation of Resources in Secular
Growth', loc. cit.
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A dynamic theory of ' production
widened; for these rapid growth phases in the sectors derive not
merely from the discontinuity of production functions but also
from high price- or income-elasticities of demand. Leading sectors
are determined not merely by the changing flow of technology and
the changing willingness of entrepreneurs to accept available innova-
tions : they are also partially determined by those types of demand
which have exhibited high elasticity with respect to price, income,
or both.
The demand for resources has resulted, however, not merely
from demands set up by private taste and choice, but also from
social decisions and from the policies of governments-whether
democratically responsive or not. It is necessary, therefore, to look
at the choices made by societies in the disposition of their resources
in terms which transcend conventional market processes. It is
necessary to look at their welfare functions, in the widest sense,
including the non-economic processes which determined them.
The course of birth-rates, for example, represents one form of
welfare choice made by societies, as income has changed; and popu-
lation curves reflect (in addition to changing death-rates) how the
calculus about family size was made in the various stages; from the
usual (but not universal) decline in birth-rates, during or soon after
the take-off, as urbanization took hold and progress became a pal-
pable possibility, to the recent rise, as Americans (and others in
societies marked by high mass-consumption) have appeared to seek
in larger families values beyond those afforded by economic security
and by an ample supply of durable consumers' goods and services.
And there are other decisions as well that societies have made as
the choices open to them have been altered by the unfolding process
of economic growth; and these broad collective decisions, deter-
mined by many factors-deep in history, culture, and the active
political process-outside the market-place, have interplayed with
the dynamics of market demand, risk-taking, technology and entre-
preneurship, to determine the specific content of the stages of
growth for each society.
How, for example, should the traditional society react to the
intrusion of a more advanced power: with cohesion, promptness,
and vigour, like the Japanese; by making a virtue of fecklessness,
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like the oppressed Irish of the eighteenth century; by slowly and
reluctantly altering the traditional society, like the Chinese?
When independent modern nationhood is achieved, how should
the national energies be disposed : in external aggression, to right
old wrongs or to exploit newly created or perceived possibilities for
enlarged national power; in completing and refining the political
victory of the new national government over old regional interests;
or in modernizing the economy?
Once growth is under way, with the take-off, to what extent
should the requirements of diffusing modern technology and maxi-
mizing the rate of growth be moderated by the desire to increase
consumption per capita and to increase welfare?
When technological maturity is reached, and the nation has at
its command a modernized and differentiated industrial machine,
to what ends should it be put, and in what proportions: to increase
social security, through the welfare state; to expand mass-consump-
tion into the range of durable consumers' goods and services; to
increase the nation's stature and power on the world scene; or to
increase leisure?
And then the question beyond, where history offers us only
fragments : what to do when the increase in real income itself loses
its charm? Babies, boredom, three-day week-ends, the moon, or
the creation of new inner, human frontiers in substitution for the
imperatives of scarcity?
In surveying now the broad contours of each stage-of-growth,
we are examining, then, not merely the sectoral structure of econo-
mies, as they transformed themselves for growth, and grew; we
are also examining a succession of strategic choices made by various
societies concerning the disposition of their resources, which include
but transcend the income- and price-elasticities of demand.
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CHAPTER 3
THE PRECONDITIONS FOR TAKE-OFF
THE TWO CASES
We consider in this chapter the preconditions for take-off: the
transitional era when a society prepares itself-or is prepared by
external forces-for sustained growth.
It is necessary to begin by distinguishing two kinds of cases
history has to offer.
There is first what might be called the general case. This case
fits not merely the evolution of most of Europe but also the greater
part of Asia, the Middle East, and Africa. In this general case the
creation of the preconditions for take-off required fundamental
changes in a well-established traditional society: changes which
touched and substantially altered the social structure and political
system as well as techniques of production.
Then there is the second case. This case covers the small group
of nations that were, in a sense, `born free':* the United States,
Australia, New Zealand, Canada, and, perhaps, a few others. These
nations were created mainly out of a Britain already far along in the
transitional process. Moreover, they were founded by social groups
-usually one type of non-conformist or another-who were at the
margin of the dynamic transitional process slowly going forward
within Britain. Finally their physical settings-of wild but abundant
land and other natural resources-discouraged the maintenance of
such elements in the traditional structure as were transplanted, and
they accelerated the transitional process by offering extremely attrac-
tive incentives to get on with economic growth. Thus the nations
within the second case never became so deeply caught up in the
structures, politics and values of the traditional society; and, there-
fore, the process of their transition to modern growth was mainly
economic and technical. The creation of the preconditions for take-
off was largely a matter of building social overhead capital-railways,
* A phrase used by Louis Hartz in The Liberal Tradition in America (New York,
1955).
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ports and roads-and of finding an economic setting in which a shift
from agriculture and trade to manufacture was profitable; for, in
the first instance, comparative advantage lay in agriculture and the
production of food-stuffs and raw materials for export.
The distinction between the two cases is real enough; but looked
at closely the lines of demarcation turn out to be not all that sharp.
The United States, for example, created for itself a kind of tradi-
tional society in the South, as an appendage to Lancashire, and
then New England's cotton mills; and the long, slow disengagement
of the South from its peculiar version of a traditional society belongs
clearly in the general rather than the special case. Canada, moreover,
has had its regional problem of a sort of traditional society in
Quebec. The take-off of the American South is a phenomenon of
the last two decades; while the take-off in Quebec may only now
be getting whole-heartedly under way.
There are other types of fuzziness as well. Are the Latin Ameri-
can states to be regarded as in the general case, or among the lucky
offspring of already transitional Europe? On the whole, we would
judge, they belong in the general case; that is, they began with
a version of a traditional society-often a merging of traditional
Latin Europe and native traditional cultures- -which required funda-
mental change before the mixed blessings of compound interest
could be attained; but the Latin American cases vary among them-
selves. Similarly, Scandinavia, somewhat like Britain itself, faced
less searching problems than many other parts of Europe in shaking
off the limiting parameters of the traditional society. Sweden is
almost in the second rather than the first category.
Nevertheless, the distinction between the two cases, properly and
modestly used, is helpful.
This chapter is concentrated on the general case; that is, on the
process, within a traditional society, by which the preconditions for
take-off are created.
THE NATURE OF THE TRANSITION
The transition we are examining has, evidently, many dimen-
sions. A society predominantly agricultural-with, in fact,
usually 75% or more of its working force in agriculture-must
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shift to a predominance for industry, communications, trade
and services.
A society whose economic, social and political arrangements are
built around the life of relatively small-mainly self-sufficient-
regions must orient its commerce and its thought to the nation and
to a still larger international setting.
The view towards the having of children-initially the residual
blessing and affirmation of immortality in a hard life, of relatively
fixed horizons-must change in ways which ultimately yield a decline
in the birth-rate, as the possibility of progress and the decline in the
need for unskilled farm labour create a new calculus.
The income above minimum levels of consumption, largely con-
centrated in the hands of those who own land, must be shifted
into the hands of those who will spend it on roads and railroads,
schools and factories rather than on country houses and servants,
personal ornaments and temples.
Men must come to be valued in the society not for their connexion
with clan or class, or, even, their guild; but for their individual
ability.to perform certain specific, increasingly specialized functions.
And, above all, the concept must be spread that man need not
regard his physical environment as virtually a factor given by nature
and providence, but as an ordered world which, if rationally under-
stood, can be manipulated in ways which yield productive change
and, in one dimension at least, progress.
All of this-and more-is involved in the passage of a traditional
to a modern growing society. Now, how shall we go about analysing
this transition? How shall we try to give to it a certain intellectual
order?
We shall turn first to its economic aspects-in a reasonably narrow
sense-and then to its non-economic dimensions.
THE ANALYSIS OF THE TRANSITION
The modern economist-or perhaps one should say, given the recent
shift of interest to growth, the modern economist of a decade ago-
might have been inclined to say to the historian something of this
sort: `This complexity about whole societies is all very well; and
it is no doubt of some interest to you and your kind; but don't
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make such heavy weather of it. What you are talking about is a rise
in the rate of investment and in the per capita stock of capital.
Get the investment-rate up to the point where the increase in output
outstrips the rate of population increase-to, say, a rate of invest-
ment over io% of national income-and the job is done. The dif-
ference between a traditional and a modern society is merely a question
of whether its investment-rate is low relative to population increase
-let us say under 5 % of national income; or whether it has risen
up to i o % or over. With a capital/output ratio of about 3, a i o %
investment-rate will outstrip any likely population growth; and
there you are, with a regular increase in output per head.'
And what the old-fashioned modern economist might have said
was, of course, quite true.
But to get the rate of investment up some men in the society
must be able to manipulate and apply-and in a closed system they
must be able to create-modern science and useful cost-reducing
inventions.
Some other men in the society must be prepared to undergo the
strain and risks of leadership in bringing the flow of available inven-
tions productively into the capital stock.
Some other men in the society must be prepared to lend their
money on long term, at high risk, to back the innovating entre-
preneurs-not in money-lending, playing the exchanges, foreign
trade or real estate-but in modern industry.
And the population at large must be prepared to accept training
for-and then to operate-an economic system whose methods are
subject to regular change, and one which also increasingly confines
the individual in large, disciplined organizations allocating to him
specialized narrow, recurrent tasks.
In short, the rise in the rate of investment-which the economist
conjures up to summarize the transition-requires a radical shift
in the society's effective attitude toward fundamental and applied
science; toward the initiation of change in productive technique;
toward the taking of risk; and toward the conditions and methods
of work.
One must say a change in effective attitude-rather than merely
a change in attitude-because what is involved here is not some
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vague change in psychological or sociological orientation, but a
change translated into working institutions and procedures. Such
change is not to be established by retrospective Gallup polls, but
by the comparative examination of political, social and economic
performance in response to similar objective profit possibilities.
Having peered briefly inside the process of investment in a world
of changing production functions, we can conclude by agreeing that,
in the end, the essence of the transition can be described legitimately
as a rise in the rate of investment to a level which regularly, sub-
stantially and perceptibly outstrips population growth; although,
when this is said, it carries no implication that the rise in the
investment-rate is an ultimate cause.
TWO SECTORAL PROBLEMS
The rise of the investment-rate, as well as reflecting these more
profound societal changes, is also the consequence of developments
in particular sectors of the economy, where the transformation of
the economy actually takes place. The analysis of economic growth
can, then, proceed only a short and highly abstracted way without
disaggregation.
To illustrate the need to pierce the veil of aggregative analysis in
the transitional period we shall look briefly now at two particular
problems shared, in one way or another, by all societies which have
learned how to grow: the problem of increased productivity in
agriculture and the extractive industries; and the problem of social
overhead capital.
AGRICULTURE AND THE EXTRACTIVE INDUSTRIES
Although a good deal of the early growth process hinges on the
food-supply, the first of these two sectoral problems is properly
to be defined as that of agriculture and the extractive industries. The
general requirement of the transition is to apply quick-yielding
changes in productivity to the most accessible and naturally produc-
tive resources. Generally, this means higher productivity in food-
production. But it may also mean wool, cotton, or silk-as in
nineteenth-century New Zealand, the American South, and Japan.
And in Sweden it meant timber; in Malaya, rubber; in the Middle
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East, oil; and in certain American regions, Australia, and Alaska,
gold helped to do the trick.
The point is that it takes more than industry to industrialize.
Industry itself takes time to develop momentum and competitive
competence; in the meanwhile there is certain to be a big social
overhead capital bill to meet; and there is almost certain to be
a radically increased population to feed. In a generalized sense
modernization takes a lot of working capital; and a good part of this
working capital must come from rapid increases in output achieved
by higher productivity in agriculture and the extractive industries.
More specifically the attempt simultaneously to expand fixed
capital-of long gestation period-and to feed an expanding popula-
tion requires both increased food output at home and/or increased
imports from abroad. Capital imports can help, of course, but in
the end loans must be serviced; and the servicing of loans requires
enlarged exports.
It is, therefore, an essential condition for a successful transition
that investment be increased and-even more important-that the
hitherto unexploited back-log of innovations be brought to bear on
a society's land and other natural resources, where quick increases
in output are possible.
Having made the general case in terms of requirements for work-
ing capital, look for a moment more closely at the question of agri-
culture and the food-supply. There are, in fact, three distinct major
roles agriculture must play in the transitional process between a
traditional society and a successful take-off.
First, agriculture must supply more food. Food is needed to meet
the likely rise in population, without yielding either starvation or
a depletion of foreign exchange available for purposes essential to
growth. But increased supplies and increased transfers of food out
of rural areas are needed for another reason: to feed the urban
populations which are certain to grow at a disproportionately high
rate during the transition. And, in most cases, increased agricultural
supplies are needed as well to help meet the foreign exchange bill
for capital development: either positively by earning foreign ex-
change, as in the United States, Russia, Canada, and several other
nations which generated and maintained agricultural surpluses while
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Agriculture and the extractive industries
their populations were growing (and their urban populations growing
faster than the population as a whole); or negatively, to minimize
the foreign exchange bill for food-like a whole series of nations
from Britain in the 1790's to Israel in the 1950's.
The central fact is that, in the transitional period, industry is
not likely to have established a sufficiently large and productive
base to earn enough foreign exchange to meet the increments in
the nation's food bill via increased imports. Population increases,
urbanization, and increased foreign exchange requirements for fixed
and working capital are all thus likely to conspire to exert a peculiar
pressure on the agricultural sector in the transitional process. Put
another way, the rate of increase in output in agriculture may set
the limit within which the transition to modernization proceeds.
But this is not all. Agriculture may enter the picture in a related
but quite distinctive way, from the side of demand as well as supply.
Let us assume that the governmental sector in this transitional
economy is not so large that its expanded demand can support the
rapid growth of industry. Let us assume that some of the potential
leading sectors are in consumers' goods-as, indeed, has often been
the case : not only cotton textiles-as in England and New England-
but a wide range of import substitutes, as in a number of Latin
American cases. In addition, the modern sector can-and often
should-be built in part on items of capital for agriculture: farm
machinery, chemical fertilizers, diesel pumps etc. In short, an
environment of rising real incomes in agriculture, rooted in increased
productivity, may be an important stimulus to new modern indus-
trial sectors essential to the take-off.
The income side of the productivity revolution in agriculture
may be important even in those cases where the _ransition to indus-
trialization is not based on consumers' goods industries; for it is
from rising rural incomes that increased taxes of one sort or another
can be drawn-necessary to finance the government's functions in
the transition-without imposing either starvation on the peasants
or inflation on the urban population.
And there is a third distinctive role for agriculture in the transi-
tional period which goes beyond its functions in supplying resources,
effective demand or tax revenues: agriculture must yield up a
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substantial part of its surplus income to the modern sector. At the
core of the Wealth of Nations-lost among propositions about pins
and free trade-is Adam Smith's perception that surplus income
derived from ownership of land must, somehow, be transferred out
of the hands of those who would sterilize it in prodigal living into
the hands of the productive men who will invest it in the modern
sector and then regularly plough back their profits as output and
productivity rise.
In their nineteenth-century land-reform schemes this is precisely
what Japan, Russia, and many other nations have done during the
transition in an effort to increase the supply of capital available
for social overhead and other essential modernizing processes.
It is thus the multiple, distinctive, but converging consequences
of the revolution in agriculture which give to it a peculiar impor-
tance in the period of preconditions. Agriculture must supply
expanded food, expanded markets, and an expanded supply of
loanable funds to the modern sector.
Generalized observations about capital formation in the aggregate
do not significantly illuminate these essential multiple connexions
between agricultural and industrial growth.
SOCIAL OVERHEAD CAPITAL
Similarly, the conventional mode for dealing with capital formation
in terms of national income aggregates does not usefully illuminate
the crucial role, in the preconditions period, of the build-up of
social overhead capital. Where data exist on the level and pattern
of capital formation in pre-take-off societies-and for the take-off
as well-it is clear that a very high proportion of total investment
must go into transport and other social overhead outlays.*
Aside from their quantitative importance, social overhead outlays
have three characteristics which distinguish them from investment
in general, as usually presented in aggregative models. First, their
* See, for example, A. K. Cairncross, Home and Foreign Investment, 1870-1913
(Cambridge, 1953), chapter iii, pp. 44-8, on the composition of Canadian investment
during the take-off period (say, 1895-1915). See also, for the pattern of investment in
Sweden and the role within it of railway and housing investment in the period 187o-9o,
E. Lindahl and others, National Income of Sweden, 1861-r93o (Stockholm, 1937),
especially pp. 257-66.
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Social overhead capital
periods of gestation and of pay-off are usually long. Unlike double-
cropping or the application of chemical fertilizers, a railway system
is unlikely to yield its results in a year or two from the time its
construction is undertaken, although it will yield large benefits over
a very long time. Second, social overhead capital is generally lumpy.
You either build the line from, say, Chicago to San Francisco or
you do not: an incomplete railway line is of limited use, although
many other forms of investment-in industry and agriculture-can
proceed usefully by small increments. Third, of its nature, the pro-
fits from social overhead capital often return to the community as
a whole-through indirect chains of causation-rather than directly
to the initiating entrepreneurs.
Taken together, these three characteristics of social overhead
capital-the long periods of gestation and pay-off, the lumpiness,
and the indirect routes of pay-off-decree that governments must
generally play an extremely important role in the process of building
social overhead capital; which means governments must generally
play an extremely important role in the preconditions period. Put
another way, social overhead capital cannot be formed-in some of
its most essential forms-by an enlarging flow of ploughed-back
profits from an initially small base. You cannot get well started
unless you can mobilize quite large initial capital sums.
Thus, even in so highly capitalist a transitional society as the
United States between 1815 and 1840, state and local governments
played a major role in initiating the build-up of social overhead
capital. The Erie Canal was built by the New York State
legislature; and the great American continental railway networks
were built with enormous federal subsidies in the form of land
grants.
The argument about agriculture and social overhead capital in
transitional societies underlines a point of method and a point of
substance. The point of method is that orderly disaggregation is
necessary for an analysis of economic growth that comes to grips
with the key strategic factors. Aggregates which may be useful for
purposes of short-run income analysis conceal more than they
illuminate when carried over into the analysis of growth. The point
of substance is that the preparation of a viable base for a modern
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The preconditions for take-off
industrial structure requires that quite revolutionary changes be
brought about in two non-industrial sectors: agriculture and social
overhead capital, most notably in transport.
NON-ECONOMIC CHANGE
We turn, now, to the non-economic side of the preconditions for
take-off.
The broad lines of societal change necessary to prepare a tradi-
tional society for regular growth are becoming familiar enough. It
would be widely agreed that a new elite-a new leadership-must
emerge and be given scope to begin the building of a modern
industrial society; and, while the Protestant ethic by no means
represents a set of values uniquely suitable for modernization, it
is essential that the members of this new elite regard modernization
as a possible task, serving some end they judge to be ethically good
or otherwise advantageous.
Sociologically this new elite must-to a degree-supersede in
social and political authority the old land-based elite, whose grasp
on income above minimum levels of consumption must be broken
where it proves impossible simply to divert that income smoothly
into the modern sector.
And more generally-in rural as in urban areas-the horizon of
expectations must lift; and men must become prepared for a life
of change and specialized function.
Something like this group of sociological and psychological
changes would now be agreed to be at the heart of the creation of
the preconditions for take-off. But this is an insufficient view.
While in no way denying the significance of some such changes in
attitude, value, social structure and expectations, we would empha-
size, in addition, the role of the political process and of political
motive in the transition.
As a matter of historical fact a reactive nationalism-reacting
against intrusion from more advanced nations-has been a most
important and powerful motive force in the transition from tradi-
tional to modern societies, at least as important as the profit motive.
Men holding effective authority or influence have been willing to
uproot traditional societies not, primarily, to make more money but
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Non-economic change
because the traditional society failed-or threatened to fail-to
protect them from humiliation by foreigners. Leave Britain aside
for a moment and consider the circumstances and motives that set
traditional societies in other regions on the road to modernization.
In Germany it was certainly a nationalism based on past humilia-
tion and future hope that did the job: the memory of Napoleon,
and the Prussian perception of the potentialities for power of
German unity and German nationalism. It was German nationalism
which stole the revolution of 1848 at Frankfurt and made the
framework within which the German take-off occurred-the Junkers
and the men of the East, more than the men of trade and the liberals
of the West. In Russia it was a series of military intrusions and
defeats, stretching out over a century, which was the great engine of
change: Napoleon's invasion, the Crimean War, the Russo-Japanese
War, and then, finally, the First World War. In Japan it was the
demonstration effect not of high profits or manufactured consumers'
goods, but of the Opium War in China in the early 1840's and
Commodore Perry's seven black ships a decade later that cast the die
for modernization. And in China, the deeply entrenched traditional
society yielded only slowly and painfully; but it did, in the end, yield
to a century of humiliations from abroad that it could not prevent.
And so also, of course, with the colonial areas of the southern
half of the world. But there, in the colonies, a dual demonstration
effect operated.
Although imperial powers pursued policies which did not always
optimize the development of the preconditions for take-off, they
could not avoid bringing about transformation in thought, know-
ledge, institutions and the supply of social overhead capital which
moved the colonial society along the transitional path; and they
often included modernization of a sort as one explicit object of
colonial policy.
In any case, the reality of the effective power that went with an
ability to wield modern technology was demonstrated and the more
thoughtful local people drew appropriate conclusions. Ports, docks,
roads, and later, railways were built; a centralized tax system was
imposed; some colonials were drawn into those minimum modern
economic activities necessary to conduct trade to produce what the
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The preconditions for take-off
colonial power wished to export and what could profitably be pro-
duced locally for the expanding urban and commercialized agri-
cultural markets; some modern goods and services were diffused
sufficiently to alter the conception of an attainable level of consump-
tion; the opportunity for a Western education was opened to a few,
at least; and a concept of nationalism, transcending the old ties
to clan or region, inevitably crystallized around an accumulating
resentment of colonial rule.
In the end, out of these semi-modernized settings, local coalitions
emerged which generated political and, in some cases, military
pressure capable of forcing withdrawal; coalitions created by both
the positive and negative types of demonstration.
Xenophobic nationalism or that peculiar form of it which deve-
loped in colonial areas has not, of course, been a unique motive
in bringing about the modernization of traditional societies. The
merchant has been always present, seeing in modernization not
only the removal of obstacles to enlarged markets and profits but
also the high status denied him-despite his wealth-in the tradi-
tional society. And there have almost always been intellectuals who
saw in modernization ways of increasing the dignity or value of
human life, for individuals and for the nation as a whole. And the
soldier-an absolutely crucial figure of the transition-often brought
much more to the job than resentment of foreign domination and
dreams of future national glory on foreign fields of battle.
THE TRANSITIONAL COALITIONS
There is no doubt that without the affront to human and national
dignity caused by the intrusion of more advanced powers, the rate
of modernization of traditional societies over the past century-and-
a-half would have been much slower than, in fact, it has been.
Out of mixed interests and motives, coalitions were formed in these
traditional or early transitional societies which aimed to make a
strong modern national government and which were prepared to
deal with the enemies of this objective: that is, they were prepared
to struggle against the political and social groups rooted in regionally
based agriculture, joined in some cases by the colonial or quasi-
colonial power.
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The transitional coalitions
These transitional coalitions often shared only one solid common
conviction; namely, that they had a stake in the creation of an
independent modern state. Historically, these coalitions often had
a political (or military) wing and an economic wing, each wing
representing somewhat different motives and objectives in the for-
mation of the new or modernized nation; thus, in Germany, the
coalition of Junkers and the Western men of commerce and industry;
in Japan, the samurai and the grain merchants; in post-1861 Russia,
the commercial middle class and the more enterprising civil servants
and soldiers.
These nineteenth-century coalitions obviously bear a family
resemblance to the post-medieval coalitions of king and urban
middle class that helped create the states of Western Europe, as
well as to such twentieth-century coalitions of soldiers, merchants
and intellectuals as that which was developed with success in Turkey,
which failed in Nationalist China, and whose destinies are still in
question in most of the southern half of the world.
THE ALTERNATIVE DIRECTIONS OF NATIONALISM
Now we come to the crux of the matter. Nationalism can be turned
in any one of several directions. It can be turned outward to right
real or believed past humiliations suffered on the world scene or to
exploit real or believed opportunities for national aggrandizement
which appear for the first time as realistic possibilities, once the
new modern state is established and the economy develops some
momentum; nationalism can be held inward and focused on the
political consolidation of the victory won by the national over the
regionally based power; or nationalism can be turned to the tasks
of economic, social, and political modernization which have been
obstructed by the old regionally based, usually aristocratic societal
structure, by the former colonial power, or by both in coalition.
Once modern nationhood is established, different elements in the
coalition press to mobilize the newly triumphant nationalist political
sentiment in different directions: the soldiers, say, abroad; the
professional politicians, to drive home the triumph of the centre
over the region; the merchants, to economic development; the
intellectuals, to social, political and legal reform.
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The preconditions for take-off
The cast of policy at home and abroad of newly created or newly
modernized states hinges greatly, then, on the balance of power
within the coalition which emerges and the balance in which the
various alternative objectives of nationalism are pursued.
A scholar at M.I.T., Mr Lawrence Barss, believes in fact that
the road to modernization was generally traversed in two distinct
phases: in the first phase the effective political coalition wanted the
fruits of modernization, but it was in fact weighted too heavily with
interests and attitudes from the traditional past to do the things
that needed doing to make a modern society. Then, finally, there
came into power, in a second transitional phase (which he calls the
`transformation') a generation of men who were not merely anxious
to assert national independence but were prepared to create an
urban-based modern society. Then, at last, the preconditions for
take-off were completed.
Whether or not the Barss two-phase transition proves to be a con-
sistent part of the common experience of the preconditions period
it is clear that the length of time and the vicissitudes of transition
from traditional to modern status depend substantially on the degree
to which local talent, energy, and resources are channelled on to
the domestic tasks of modernization as opposed to alternative
possible objectives of nationalism; and this channelling must,
in the general case, be in substantial part a function of political
leadership.
This is so because the central government has essential, major
technical tasks to perform in the period of preconditions. There
is no need for the government to own the means of production;
on the contrary. But the government must be capable of organizing
the nation so that unified commercial markets develop; it must
create and maintain a tax and fiscal system which diverts resources
into modern uses, if necessary at the expense of the old rent-collec-
tors; and it must lead the way through the whole spectrum of
national policy-from tariffs to education and public health-
toward the modernization of the economy and the society of which
it is a part. For, as emphasized earlier, it is the inescapable respon-
sibility of the state to make sure the stock of social overhead capital
required for take-off is built; and it is likely as well that only vigorous
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The alternative directions of nationalism
leadership from the central government can bring about those
radical changes in the productivity of agriculture and the use of
other natural resources whose quick achievement may also constitute
a precondition for take-off.
THE FIRST TAKE-OFF
This way of looking at things poses an interesting historical problem.
If the break-up of traditional societies is judged to have been induced
by the transmission of demonstration effects from other societies,
how shall we account for the first take-off, that of Great Britain?
The classic answer to that question is also the most obvious and
sensible; and it may be the one nearest historical truth. It is, essen-
tially, that in the late eighteenth century, while many parts of
Western Europe were caught up in a version of the preconditions
process, only in Britain were the necessary and sufficient conditions
fulfilled for a take-off. This combination of necessary and sufficient
conditions for take-off in Britain was the result of the convergence
of a number of quite independent circumstances, a kind of statistical
accident of history which, once having occurred, was irreversible,
like the loss of innocence.
How does the classic answer unfold?
It unfolds, essentially, from two features of post-medieval Europe:
the discovery and rediscovery of regions beyond Western Europe,
and the initially slow but then accelerating development of modern
scientific knowledge and attitudes.
From the discovery of new territories a whole chain of develop-
ments resulted, in which most of Western Europe shared, in varying
degree. First there was the expansion of trade, including trade in
new commodities, both foods and textiles-and even such raw
materials as the new dyes. With the rise of commerce came a rise in
shipping and, perhaps more important, a rise in the institutions of
credit and commerce; and above all a rise of men devoted to com-
merce : men concerned with fine calculations of profit and loss, men
of wide horizons, whose attitudes communicated themselves in
various ways throughout their societies.
The new territories and the trade that developed with them were
a profound lateral innovation in Western European society; lateral
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The preconditions for take-off
as distinct from the kind of vertical innovation incorporated in, say,
the steam-engine or the spinning machines.
The meaning and impact of this lateral innovation was heightened
and given a peculiar turn because it occurred in a system of inherently
competitive nation states. The dynastic struggles, over who would
control the fixed quantity of European real estate, became mixed
up with the question of who would control the flows of trade and
who would derive from them the maximum favourable balance of
bullion, naval stores, and the like. But, as Charles Wilson points out,
the concern of governments with trade transcended primitive con-
cerns with military or even political power on the international
scene. The pursuit and protection of a favourable trade balance was,
says Wilson,
in many countries an obsession with statesmen and the achievement of
a favourable balance of trade a prime object of policy. The explanation
of the seeming paradox must lie in the close relationship between govern-
ments and strong groups with vested interests in foreign trade ... as well
as in the fiscal interests of governments themselves. More than that,
a trade stoppage might produce unemployment and danger to public
order in particular areas, or even a threat to national security. In England
Jamaican cotton was increasingly used in the Lancashire cotton industry.
West Indian dyes were essential for the treatment of dark cloths in York-
shire and the West Country. Raw silk from Smyrna and Leghorn was
necessary for the silk spinners of the English midlands and the weavers
of Spitalfields.*
And Wilson's catalogue of vital interconnexions, reaching deep into
each national society, rolls on.
Thus, quite aside from questions of power, the great lateral
innovation had, in the Smithian sense, widened the market, pro-
ducing new types of specialization and interdependence, including
international interdependence in manufacturing.
The second general force operating in Western Europe was the
spirit of science and productive gadgeteering, of Galileo and
Leonardo down to Newton, Bacon, and the flood of eighteenth-
century men caught up in what Ashton aptly calls `the impulse to
contrive':- the men who wrestled purposefully to break the bottle-
* The New Cambridge Modern History, vol. vu (Cambridge, 1957), P. 45?
t T. S. Ashton, An Economic History of England: the Eighteenth Century (London,
1955), P. 104.
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The first take-off
necks in fuel-supply for iron-making, in spinning, in the efficiency
of steam-engines, and so on.
Something like this background of competitive trading and
purposeful contriving-with all its ramified consequences-ac-
companied by a strengthening of national governments, partly in
response to the problems of international competition-is the
setting of the preconditions period for Western Europe, taken
as a whole.
Now, why Britain? Why not France? Why not the most advanced
of the preconditions countries of the seventeenth century-the
Netherlands-that taught the others so much?
Here, again, there is a familiar catalogue. The Dutch became too
committed to finance and trade, without an adequate manufacturing
base-partly because they lacked raw materials at home, partly
because the financial and trading groups predominated rather than
the manufacturers. And then, when Britain and France threw their
full weight into the competition for trade, in the eighteenth century,
the Netherlands lacked either the economic resources or the naval
and military resources to stay in the commercial lead or to create
an industrial take-off.
What about the French? They were too rough with their Pro-
testants. They were politically and socially too inflexible, caught
up not merely in a class society but a caste society. The best minds
and spirits of eighteenth-century France, so the classical story goes,
had to think about political, social and religious revolution rather
than economic revolution. Moreover the French were committed
heavily to ground warfare in Europe; and they cheated on shipping
and naval strength at an historical moment when ships mattered
greatly.
And so Britain, with more basic industrial resources than the
Netherlands; more nonconformists, and more ships than France;
with its political, social, and religious revolution fought out by 1688
-Britain alone was in a position to weave together cotton manu-
facture, coal and iron technology, the steam-engine, and ample
foreign trade to pull it off.
It is fair to ask also, why not the United States? The United
States, after all, had an ample domestic market, was even kinder than
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The preconditions for take-off
Britain to its Nonconformists, and wasted even less of its resources
than Britain in war. Here we are properly told that the attractions
of ample fertile land and trade based on the possession of rich
natural resources were too great to draw sufficient energy, talent,
and resources into industry in the eighteenth century. Also, to some
degree, the mercantilist policy imposed by Britain in the American
colonies might have slowed down the preconditions a bit. And,
one can add, in the American colonies-as in many other colonial
societies-the best minds and most energetic spirits tended to be
drawn into problems of politics until independence was achieved
and consolidated; that is, from about the middle of the eighteenth
century forward. It is only after 1815-with the passage of the
generation of men who created independence and a working constitu-
tion-that American society began to concentrate the energies of
its ablest men on the adventure of developing a modern continental
economy.
Something like this we can take to be the classical tale.
But it is possible to pose a further question: why was eighteenth-
century Britain more tolerant of its Nonconformists than France;
why had it emerged from the seventeenth century with, relatively,
so flexible a social structure, with a sense of nationalism that
softened those political and social rigidities that gave France such
difficulty and permitted the innovators of the industrial revolution
to do their job?
An answer to these deeper questions places Britain back in the
general case, to some significant degree. The general case is of a
society modernizing itself in a nationalist reaction to intrusion or
the threat of intrusion from more advanced powers abroad. The
British experience of freeing itself from the Church in Rome, and
from the Spanish power that backed it in the sixteenth century;
the phase of relatively spacious Elizabethan nationalism; the pain-
fully achieved national consensus of the seventeenth century, brought
about by 1688, accompanied by an obsessive effort to break Britain
free of what was regarded as the quasi-colonial relationship to
the Dutch; the eighteenth-century struggles with the larger and
apparently more powerful French... all of this is a not wholly
unfamiliar story of reactive nationalism, creating a setting in which
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modernization-in its post-1688 context-was a widely sanctioned,
and even encouraged, goal.
It is possible, then, that British nationalism, transcending caste
loyalties, created by a series of intrusions and challenges to a lesser
island off a dominant mainland, may have been a major force in
creating a relatively flexible social matrix within which the process
of building the preconditions for take-off was hastened in Britain;
and in that limited sense the first take-off takes its place, despite
many unique features, with the others.
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CHAPTER 4
THE TAKE-OFF
THE ACHIEVEMENT OF REGULAR GROWTH
We turn now to analyse narrowly that decisive interval in the history
of a society when growth becomes its normal condition. We consider
how it comes about that the slow-moving changes of the precondi-
tions period, when forces of modernization contend against the
habits and institutions, the values and vested interests of the tradi-
tional society, make a decisive break-through; and compound interest
gets built into the society's structure.
As suggested in chapter 3, take-offs have occurred in two quite
different types of societies; and, therefore, the process of establishing
preconditions for take-off has varied. In the first and most general
case the achievement of preconditions for take-off required major
changes in political and social structure and even in effective social
values. In the second case take-off was delayed not by political,
social and cultural obstacles but by the high (and even expanding)
levels of welfare that could be achieved by exploiting land and
natural resources. In this second case take-off was initiated by a
more narrowly economic process as, for example, in the northern
United States, Australia and, perhaps, Sweden. And, you will
recall, as one would expect in the essentially biological field of
economic growth, history offers mixed as well as pure cases.
The beginning of take-off can usually be traced to a particular
sharp stimulus. The stimulus may take the form of a political
revolution which affects directly the balance of social power and
effective values, the character of economic institutions, the distribu-
tion of income, the pattern of investment outlays and the proportion
of potential innovations actually applied. Such was the case, for
example, with the German revolution of 1848, the Meiji restoration
in Japan of 1868, and the more recent achievement of Indian
independence and the Communist victory in China. It may come
about through a technological (including transport) innovation,
which sets in motion a chain of secondary expansion in modern
36
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The achievement of regular growth
sectors and has powerful potential external economy effects which
the society exploits. It may take the form of a newly favourable
international environment, such as the opening of British and French
markets to Swedish timber in the 186o's or a sharp relative rise in
export prices and/or large new capital imports, as in the case of the
United States from the late 1840's, Canada and Russia from the
mid-189o's; but it may also come as a challenge posed by an
unfavourable shift in the international environment, such as a sharp
fall in the terms of trade (or a war-time blockage of foreign trade)
requiring the rapid development of manufactured import substitutes,
as with the Argentine and Australia from 1930 to 1945.
What is essential here is not the form of stimulus but the fact that
the prior development of the society and its economy result in a
positive, sustained, and self-reinforcing response to it: the result is not
a once-over change in production functions or in the volume of in-
vestment, but a higher proportion of potential innovations accepted
in a more or less regular flow, and a higher rate of investment.
The use of aggregative national-income terms evidently reveals
little of the process which is occurring. It is nevertheless useful
to regard as a necessary but not sufficient condition for the take-off
the fact that the proportion of net investment to national income
(or net national product) rises from, say, 5 % to over 1o %, definitely
outstripping the likely population pressure (since under the assumed
take-off circumstances the capital/output ratio is low),* and yielding
a distinct rise in real output per capita. Whether real consumption
* Capital/output ratio is the amount by which a given increase in investment
increases the volume of output: a rough-very rough-measure of the productivity of
capital investment; but since the arithmetic of economic growth requires some such
concept, implicitly or explicitly, we had better refine the tool rather than abandon it. In
the early stages of economic development two contrary forces operate on the capital/out-
put ratio. On the one hand there is a vast requirement of basic overhead capital in
transport, power, education etc. Here, due mainly to the long period over which
investment yields its return, the apparent (short-run) capital/output ratio is high. On the
other hand, there are generally large unexploited back-logs of known techniques and
available natural resources to be put to work; and these back-logs make for a low capital/
output ratio. We can assume formally a low capital/output ratio for the take-off period
because we are assuming that the preconditions have been created, including a good
deal of social overhead capital. In fact, the aggregate marginal capital/output ratio is
likely to be kept up during the take-off by the requirement of continuing large outlays
for overhead items which yield their returns only over long periods. Nevertheless, a
ratio of 3:1 or 3.5:1 for the incremental capital/output ratio seems realistic as a rough
bench-mark until we have learned more about capital/output ratios on a sectoral basis.
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per capita rises depends on the pattern of income distribution and
population pressure, as well as on the magnitude, character and
productivity of investment itself.
As indicated in the accompanying table, we believe it possible
to identify at least tentatively such take-off periods for a number of
countries which have passed into the stage of growth.
TABLE I. Some tentative, approximate take-off dates
Country
Take-off
Country
Take-off
Great Britain
1783-1802
Russia
18go-1914
France
1830-6o
Canada
1896-1914
Belgium
1833-6o
Argentina$
1935-
United States*
1843-6o
Turkeys
1937-
Germany
1850-73
Indiali
1952-
Sweden
1868-go
Chinall
1952-
Japant
1878-1900
* The American take-off is here viewed as the upshot of two different periods of
expansion: the first, that of the 1840's, marked by railway and manufacturing develop-
ment, mainly confined to the East-this occurred while the West and South digested the
extensive agricultural expansion of the previous decade; the second the great railway
push into the Middle West during the 1850's marked by a heavy inflow of foreign capital.
By the opening of the Civil War the American economy of North and West, with real
momentum in its heavy-industry sector, is judged to have taken off.
t Lacking adequate data, there is some question about the timing of the Japanese
take-off. Some part of the post-i868 period was certainly, by the present set of defini-
tions, devoted to firming up the preconditions for take-off. By 1914 the Japanese eco-
nomy had certainly taken off. The question is whether the period from about 1878 to
the Sino-Japanese War in the mid-189o's is to be regarded as the completion of the
preconditions or as take-off. On present evidence we incline to the latter view.
$ In one sense the Argentine economy began its take-off during the First World War.
But by and large, down to the pit of the post-1929 depression, the growth of its modern
sector, stimulated during the war, tended to slacken; and, like a good part of the Western
world, the Argentine sought during the 192o's to return to a pre-1914 normalcy. It
was not until the mid-1930's that a sustained take-off was inaugurated, which by and
large can now be judged to have been successful despite the structural vicissitudes of
that economy.
? Against the background of industrialization measures inaugurated in the mid-
1930's the Turkish economy has exhibited remarkable momentum in the past five years
founded in the increase in agricultural income and productivity. It still remains to be
seen whether these two surges, conducted under quite different national policies, will
constitute a transition to self-sustaining growth, and whether Turkey can overcome its
current structural problems.
11 As noted in the text it is still too soon to judge either the present Indian or Chinese
Communist take-off efforts successful.
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The take-off
THE TAKE-OFF DEFINED AND ISOLATED
The take-off is such a decisive transition in a society's history that
it is important to examine the nature of our definition and the inner
mechanism of take-off somewhat more closely.
There are several problems of choice involved in defining the
take-off with precision. We might begin with one arbitrary defini-
tion and consider briefly the two major alternatives.
For the present purposes the take-off is defined as requiring all
three of the following related conditions:
(I) a rise in the rate of productive investment from, say, 5% or
less to over io% of national income (or net national product (NNP));
(2) the development of one or more substantial manufacturing*
sectors, with a high rate of growth;
(3) the existence or quick emergence of a political, social and
institutional framework which exploits the impulses to expansion in
the modern sector and the potential external economy effects of the
take-off and gives to growth an on-going character.
The third condition implies a considerable capability to mobilize
capital from domestic sources. Some take-offs have occurred with
virtually no capital imports, for example, Britain and Japan. Some
take-offs have had a high component of foreign capital, for example,
the United States, Russia and Canada. But some countries have
imported large quantities of foreign capital for long periods, which
undoubtedly contributed to creating the preconditions for take-off
without actually initiating take-off, for example the Argentine before
1914, Venezuela down to recent years, the Belgian Congo currently.
In short, whatever the role of capital imports, the preconditions
for take-off include an initial ability to mobilize domestic savings
productively, as well as a structure which subsequently permits a
high marginal rate of savings.
This definition is designed to isolate the early stage when indus-
* In this context `manufacturing' is taken to include the processing of agricultural
products or raw materials by modern methods: for example, timber in Sweden, meat
in Australia, dairy products in Denmark. The dual requirement of a `manufacturing'
sector is that its processes set in motion a chain of further modern sector requirements
and that 'its expansion provides the potentiality of external economy effects, industrial
in character.
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The take-off
trialization takes hold rather than the later stage when industrializa-
tion becomes a more massive and statistically more impressive
phenomenon. In Britain, for example, there is no doubt that it was
between 1815 and 1850 that industrialization fully took hold. If the
criterion chosen for take-off was the period of most rapid overall
industrial growth, or the period when large-scale industry matured,
all our take-off dates would have to be set later; Britain, for
example, to 1819-48; the United States, to 1868-93; Sweden, to
18go-192o; Japan, to 1900-20; Russia, to 1928-40. The earlier
dating is chosen here because it is believed that the decisive trans-
formations (including a decisive shift in the investment-rate) occur
in the first industrial phases; and later industrial maturity can be
directly traced back to foundations laid in these first phases.
This definition is also designed to rule out from the take-off the
quite substantial economic progress which can occur in an economy
before a truly self-reinforcing growth process gets under way.
Consider, for example, British economic expansion between, say,
1750 and 1783; Russian economic expansion between, say, 1861
and 1890, Canadian economic expansion between 1867 and the mid-
189o's. Such periods-for which there is an equivalent in the
economic history of almost every growing economy-were marked
by extremely important, even decisive, developments. The transport
network expanded, and with it both internal and external commerce;
a revolution in agricultural productivity was, at least, begun; new
institutions for mobilizing savings were developed; a class of com-
mercial and even industrial entrepreneurs began to emerge; indus-
trial enterprise on a limited scale (or in limited sectors) grew. And
yet, however essential these pre-take-off periods were for later
development, their scale and momentum were insufficient to trans-
form the economy radically or, in some cases, to outstrip population
growth and to yield an increase in per capita output.
With a sense of the considerable violence done to economic
history, we are here seeking to isolate a period when the scale of
productive economic activity reaches a critical level and produces
changes which lead to a massive and progressive structural trans-
formation in economies and the societies of which they are a part,
better viewed as changes in kind than merely in degree.
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The take-off
EVIDENCE ON INVESTMENT-RATES IN THE TAKE-OFF
The case for the concept of take-off hinges, in part, on quantitative
evidence on the scale and productivity of investment in relation
to population growth. Here we face a difficult problem; for invest-
ment data are not now generally available for early stages in economic
history. Below is set out such a case as there is for regarding the
shift from a productive investment-rate of about 5% of NNP to
Io% or more as central to the process.
I. A prima facie case
If we take the marginal capital/ output ratio for an economy in
its early stages of economic development at 3-5: 1 and if we assume,
as is not abnormal, a population rise of 1-1-5% per annum it is
clear that something between 3.5 and 5-25% of NNP must be
regularly invested if NNP per capita is to be sustained. An increase
of 2 % per annum in NNP per capita requires, under these assump-
tions, that something between 10.5 and 12.5 % of NNP be regularly
invested. By definition and assumption, then, a transition from
relatively stagnant to substantial, regular rise in NNP per capita,
under typical population conditions, requires that the proportion
of national product productively invested should move from
somewhere in the vicinity of 5 % to something in the vicinity
of Io%.
2. The Swedish case
In the appendix to his paper on international differences in capital
formation, Kuznets gives gross and net capital formation figures
in relation to gross and net national product for a substantial group
of countries where reasonably good statistical data exist. Excepting
Sweden, these data do not go back clearly to pre-take-off stages.*
* The Danish data are on the margin. They begin with the decade 1870-9, probably
the first decade of take-off itself. They show net and gross domestic capital formation
rates well over io%. In view of the sketch of the Danish economy presented in Kjeld
Bjerke's `Preliminary Estimates of the Danish National Product from r87o-195o'
(preliminary paper mimeographed for 1953 Conference of the International Association
for Research on Income and Wealth), pp. 32-4, it seems likely that further research
would identify the years 1830-7o as a period when the preconditions were actively
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The Swedish data begin in the decade 1861-70; and the Swedish
take-off is to be dated from the latter years of the decade, as shown
in Table 2. (GCF: Gross Capital Formation; GNP: Gross National
Product; NCF: Net Capital Formation; DGCF: Domestic GCF.)
TABLE 2. Kuznets' table of calculations for Sweden
Domestic Domestic Depreciation
GCF/GNP NCF/NNP to DGCF
D
ecade
(%)
(%)
(%)
r.
1861-70
5'8
3'5-
(42)
2.
1871-80
8.8
5'3
(42)
3.
1881-90
10.8
6.6
(42)
4.
1891-1900
13'7
8'1
43'9
5.
1901-10
18-o
11.6
40.0
6.
1911-20
20.2
13'5
38'3
7.
1921-30
19.0
11.4
45'2
Note (Kuznets'): Based on estimates in Eric Lindahl, op. cit., parts 1 and it, particularly
the details in Part i1. These underlying totals of capital formation exclude changes in
inventories. While gross totals are directly from the volumes referred to above, deprecia-
tion for the first three decades was not given. We assumed that it formed 42% of gross
domestic capital formation.
3. The Canadian case
The data developed by 0. J. Firestone* for Canada indicate a
similar transition for net capital formation in its take-off (say,
established, 187o-t9oo as a period of take-off. This view is supported by scattered and
highly approximate estimates of Danish national wealth which exhibit a remarkable
surge in capital formation between 1864 and 1884.
Estimates of National Wealth in Denmark
sooo millions
1864
of kroner
3'5
Source
Falbe-Hansen, Danmarks statistik (1885).
1884
6.5
Falbe-Hansen, op. cit.
1899
7.2
Tax-commission of 1903.
1909
1010
Jens Warming, Danmarks statistik (1913).
1927
24.0
Jens Warming, Danmarks erhvervs-or samfundsliv
(1930).
1939
28.8
Economic expert committee of 1943, Bkonomiske
1950
54'5
efterkrigsproblemer (1945).
N. Banke, N. P. Jacobsen and Vedel-Petersen,
Danske erhvervsliv (1951).
(Furnished in correspondence by Einar Cohn and Kjeld Bjerke.) It should again be
emphasized, however, that we are dealing with a hypothesis whose empirical foundations,
on the side of statistics, are still fragmentary.
* 0. J. Firestone, Canada's Economic Development, 1867-1952, with Special Reference
to Changes in the Country's National Product and National Wealth, paper prepared for
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Evidence on investment-rates in the take-off
1896-1914); but the gross investment proportion in the period from
Confederation to the mid-18go's was higher than appears to have
marked other periods when the preconditions were established,
due to investment in the railway network (abnormally large for
a nation of Canada's population), and to relatively heavy foreign
investment, even before the great capital import boom of the pre-
1914 decade (see Table 3).
TABLE 3. Canada: gross and net investment in durable physical assets
as percentage of gross and net national expenditure (for selected years)
GCF/GNP
NCF/NNP
Capital
consumption as
percentage of
gross
investment
1870
15.0
7.1
56?z
1900
13'1
4'0
72'5
1920
16.6
1o?6
41'3
1929
23.0
12.1
53'3
1952
16.8
9'3
49'7
4. The pattern of contemporary evidence in general*
In the years after 1945 the number of countries for which reason-
ably respectable national income (or product) data exist has grown;
and with such data there have developed some tolerable savings
and investment estimates for countries at different stages of the
growth process. Within the category of nations usually grouped as
`underdeveloped' one can distinguish four types.f
the International Association for Research in Income and Wealth (1953), to which
Mr Firestone has kindly furnished me certain revisions, shortly to be published. By
1900 Canada already had about 18,ooo miles of railway line; but the territory served
had been developed to a limited degree only. By 1900 Canada already had a net balance
of foreign indebtedness of over $1 billion. Although this figure was almost quadrupled
in the next two decades, capital imports represented an important increment to domestic
capital sources from the period of Confederation down to the pre-1914 Canadian boom,
which begins in the mid-18go's.
* I am indebted to Mr Everett Hagen for mobilizing the statistical data in this section,
except where otherwise indicated.
t The percentages given are of net capital formation to net domestic product. The
latter is the product net of depreciation of the geographic area. It includes the value of
output produced in the area, regardless of whether the income flows abroad. Since
indirect business taxes are not deducted, it tends to be larger than national income;
hence the percentages are lower than if national income was used as the denominator in
computing them.
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The take-off
(a) Pre-take-off economies, where the apparent savings and in-
vestment-rates, including limited net capital imports, probably come
to under 5 % of net national product. In general, data for such
countries are not satisfactory, and one's judgment that capital forma-
tion is low must rest on fragmentary data and partially subjective
judgment. Examples are Ethiopia, Kenya, Thailand, Cambodia,
Afghanistan and perhaps Indonesia.*
(b) Economies attempting take-off, where the apparent savings
and investment-rates, including limited net capital imports, have
risen over 5 % of net national product.- For example, Mexico (1950),
Net Capital Formation/Net Domestic Product 7.2%; Chile (1950),
NCF/NDP 9.5 %; Panama (1950), NCF/NDP 7.5 %; Philippines
(1952), NCF/NDP 6.4%; Puerto Rico (1952), NCF (private)/NDP
7.6%; India (1953), NCF/NDP perhaps about 7%. Whether the
take-off period will, in fact, be successful remains in most of
these cases still to be seen; although Mexico, at least, would appear
to have passed beyond this historical watershed.
(c) Growing economies, where the apparent savings and invest-
ment-rates, including limited net capital imports, have reached 1o%
or over; for example, Colombia (1950), NCF/NDP 16.3%.
(d) Enclave economies: (i) cases where the apparent savings and
investment-rates, including substantial net capital imports, have
reached 1o% or over, but the domestic preconditions for sustained
growth have not been achieved. These economies, associated with
* The Office of Intelligence Research of the Department of State, Washington, D.C.,
gives the following estimated ratios of investment (presumably gross) to GNP in its
Report No. 6672 of 25 August 1954, P. 3, based on latest data available to that point,
for countries which would probably fall in the pre-take-off category:
Afghanistan 5 Pakistan 6
Ceylon 5 Indonesia 5
t The Department of State estimates (ibid.) for economies which are either attempting
take-off or which have, perhaps, passed into a stage of regular growth include:
0
o
Argentina 13 Colombia 14
Brazil 14 Philippines 8
Chile II Venezuela 23
Venezuela has been for some time an `enclave economy', with a high investment-rate
concentrated in a modern export sector whose growth did not generate general economic
momentum in the Venezuelan economy; but in the past few years Venezuela may have
moved over into the category of economies experiencing an authentic take-off.
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Evidence on investment-rates in the take-off
major export industries, lack the third condition for take-off sug-
gested above (p. 39). They include the Belgian Congo (1951),
NCF/NDP 21.7 %; Southern Rhodesia (1950), GCF/GDP 45'5 %,
(1952) GCF/GDP 45'4%?
(ii) Cases where net capital exports are large. For example,
Burma (1938), NCF/NDP, TI %; net capital exports/NDP 1"5%;
Nigeria (1950-1), NCF/NDP 5' I %; net capital exports/NDP 5.6 %.
5. The cases of India and Communist China
The two outstanding contemporary cases of economies attempting
purposefully to take off are India and Communist China, both
operating under national plans. The Indian First Five Year Plan
projected the growth-process envisaged under assumptions similar
to those in paragraph I, p. 41, above. The Indian Planning Commis-
sion estimated investment as 5 % of NNP in the initial year of the
plan, 1950-1.'* Using a 3:1 marginal capital/output ratio, they
envisaged a marginal savings rate of 20 % for the First Five Year
Plan, a 50% rate thereafter, down to 1968-9, when the average
proportion of income invested would level off at 20% of NNP.
As one would expect, the sectoral composition of this process is
not fully worked out in the initial plan; but the Indian effort may
well be remembered in economic history as the first take-off defined
ex ante in national product terms.
So far as the aggregates are concerned, what we can say is
that the Indian planned figures fall well within the range of
prima facie hypothesis and historical experience, if India in fact
fulfils the full requirements for take-off. The Chinese Communist
figures are somewhat more ambitious in both agriculture and
industry.
As of 1959, the momentum achieved over the past six years in
China appears somewhat greater than that in India; but it will be
some time before the accounts of progress in the two countries can
be cast up with confidence-notably, with respect to agricultural
development, which must play so large a role in each. What can
be said is that the plans of both countries, in their overall investment
* Government of India, Planning Commission, The First Five Year Plan (1952),
vol. i, chapter t.
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The take-off
goals and sectoral composition, are consistent with the take-off
requirements; and, perhaps more important, the commitment of
both societies to modernization appears too deep to permit more than
temporary set-backs.
THE INNER STRUCTURE OF THE TAKE-OFF
Whatever the importance and virtue of viewing the take-off in
aggregative terms-embracing national output, the proportion of
output invested, and an aggregate marginal capital/output ratio-
that approach tells us relatively little of what actually happens and
of the causal processes at work in a take-off; nor is the investment-
rate criterion conclusive.
Following the definition of take-off, we must consider not merely
how a rise in the investment-rate is brought about, from both
supply and demand perspectives, but how rapidly growing manu-
facturing sectors emerged and imparted their primary and secondary
growth impulses to the economy.
Perhaps the most important thing to be said about the behaviour
of these variables in historical cases of take-off is that they have
assumed many different forms. There is no single pattern. The rate
and productivity of investment can rise, and the consequences of
this rise can be diffused into a self-reinforcing general growth
process by many different technical and economic routes, under the
aegis of many different political, social and cultural settings, driven
along by a wide variety of human motivations.
The purpose of the following paragraphs is to suggest briefly,
and by way of illustration only, certain elements of both uniformity
and variety in the variables whose movement has determined the
inner structure of the take-off.
THE SUPPLY OF LOANABLE FUNDS
By and large, the loanable funds required to finance the take-off
have come from two types of source: from shifts in the control
of income flows, including income-distribution changes and capital
imports; and from the plough-back of profits in rapidly expanding
particular sectors.
The notion of economic development occurring as a result of
46
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The supply of loanable funds
income shifts from those who will spend (hoard* or lend) less
productively to those who will spend (or lend) more productively
is one of the oldest and most fundamental notions in economics.
It is basic, for example, to the Wealth of Nations.-
Historically, income shifts conducive to economic development
have assumed many forms. In Meiji Japan and also in Czarist Russia
the substitution of government bonds for the great landholders'
claims on the flow of rent payments led to a highly Smithian
redistribution of income into the hands of those in the modern
sector. In both cases the real value of the government bonds
exchanged for land depreciated; and, in general, the feudal land-
lords emerged with a less attractive arrangement than had first
appeared to be offered. Aside from the confiscation effect, two posi-
tive impulses arose from land reform: the State itself used the flow
of payments from peasants, now diverted from landlords' hands,
for activity .which encouraged economic development; and a certain
number of the more enterprising former landlords directly invested
in commerce and industry. In contemporary India and China we
can observe quite different degrees of income transfer by this route.
India is relying to only a very limited extent on the elimination of
large incomes unproductively spent by large landlords; although
this element figures in a small way in its programme. Communist
China has systematically transferred all non-governmental pools
of capital into the hands of the State, in a series of undisguised or
barely disguised capital levies; and it is drawing heavily for capital
resources on the mass of middle and poor peasants who remain.$
In addition to confiscatory and taxation devices, which can operate
effectively when the State is spending more productively than the
taxed individuals, inflation has been important to several take-offs.
* Hoarding can, of course, be helpful in the growth process by depressing consump-
tion and freeing resources for investment, if, in fact, non-hoarding persons or institutions
acquire the resources and possess the will to expand productive investment. A direct
transfer of income is evidently not required.
1' See, especially, Smith's observations on the `perversion' of wealth by `prodigality'
-that is, unproductive consumption expenditures-and on the virtues of `parsimony'
which transfers income to those who will increase `the fund which is destined
for the maintenance of productive hands'. Routledge edition (London, 1890),
PP. 259-60.
I W. W. Rostow et al., Prospects for Communist China (New York and London, 1954),
Part 4.
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The take-off
In Britain of the late 1790's, the United States of the 1850's, Japan
of the 1870's there is no doubt that capital formation was aided by
price inflation, which shifted resources away from consumption to
profits.
The shift of income flows into more productive hands has, of
course, been aided historically not only by government fiscal mea-
sures but also by banks and capital markets. Virtually without
exception, the take-off periods have been marked by the extension of
banking institutions which expanded the supply of working capital;
and in most cases also by an expansion in the range of long-range
financing done by a central, formally organized, capital market.
Although these familiar capital-supply functions of the State
and private institutions have been important to the take-off, it is
likely to prove the case, on close examination, that a necessary
condition for take-off was the existence of one or more rapidly
growing sectors whose entrepreneurs (private or public) ploughed
back into new capacity a very high proportion of profits. Put
another way, the demand side of the investment process, rather
than the supply of loanable funds, may be the decisive element in
the take-off, as opposed to the period of creating the preconditions,
or of sustaining growth once it is under way. The distinction is,
historically, sometimes difficult to make, notably when the State
simultaneously acts both to mobilize supplies of finance and to
undertake major entrepreneurial acts. There are, nevertheless, periods
in economic history when quite substantial improvements in the
machinery of capital supply do not, in themselves, initiate a take-off,
but fall within the period when the preconditions are created : for
example, British banking developments in the century before 1783
and Russian banking developments before 18go.
One extremely important version of the plough-back process has
taken place through foreign trade. Developing economies have
created from their natural resources major export industries; and
the rapid expansion in exports has been used to finance the import
of capital equipment and to service the foreign debt during the
take-off. United States, Russian and Canadian grain fulfilled this
function, Swedish timber and pulp, Japanese silk, etc. Currently
Chinese exports to the Communist bloc, wrung at great administrative
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and human cost from the agricultural sector, play this decisive role.
It should be noted that the development of such export sectors has
not in itself guaranteed accelerated capital formation. Enlarged
foreign-exchange proceeds have been used in many familiar cases
to finance hoards (as in the famous case of Indian bullion imports)
or unproductive consumption outlays.
One possible mechanism for inducing a high rate of plough-back
into productive investment is a rapid expansion in the effective
demand for domestically manufactured consumers' goods, which
would direct into the hands of vigorous entrepreneurs an increasing
proportion of income flows under circumstances which would lead
them to expand their own capacity and to increase their requirements
for industrial raw materials, semi-manufactured products and manu-
factured components.
A final element in the supply of loanable funds is, of course,
capital imports. Foreign capital has played a major role in the
take-off stage of many economies: for example the United States,
Russia, Sweden, Canada. The cases of Britain and Japan indicate,
however, that it cannot be regarded as. an essential condition.
Foreign capital was notably useful when the construction of railways
or other large overhead capital items with a long period of gestation
played an important role in the take-off or the late preconditions
period. Whatever its strategic role, the proportion of investment
required for growth which goes into industry is relatively small
compared to that required for utilities, transport and the housing
of enlarged urban populations. And foreign capital can be mightily
useful in helping carry the burden of these overhead items either
directly or indirectly.
What can we say, in general, then, about the supply of finance
during the take-off period? First, as a precondition, it appears
necessary that the community's surplus above the mass-consump-
tion level does not flow into the hands of those who will sterilize it
by hoarding, luxury consumption or low-productivity investment
outlays. Second, as a precondition, it appears necessary that institu-
tions be developed which provide cheap and adequate working
capital. Third, as a necessary condition, it appears that one or more
sectors of the community must grow rapidly, inducing a more general
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The take-off
industrialization process; and that the entrepreneurs in such sectors
plough back a substantial proportion of their profits in further
productive investment, one possible and recurrent version of the
plough-back process being the investment of proceeds from a rapidly
growing export sector.
The devices, confiscatory and fiscal, for ensuring the first and
second preconditions have been historically various. And, as indi-
cated below, the types of leading manufacturing sectors which have
served to initiate the take-off have varied greatly. Finally, foreign
capital flows have, in significant cases, proved extremely important
to the take-off, notably when lumpy overhead capital construction
of long gestation period was required; but take-offs have also occurred
based almost wholly on domestic sources of finance.
THE SOURCES OF ENTREPRENEURSHIP
It is evident that the take-off requires the existence and the success-
ful activity of some group in the society which is prepared to accept
innovations. As noted above, the problem of entrepreneurship in
the take-off has not been profound in a limited group of wealthy
agricultural nations whose populations derived by emigration mainly
from north-western Europe. There the problem of take-off was
primarily economic; and when economic incentives for industrializa-
tion emerged commercial and banking groups moved over easily
into industrial entrepreneurship. In many other countries, however,
the development of adequate entrepreneurship was a more searching
social process.
Under some human motivation or other, a group must come to
perceive it to be both possible and good to undertake acts of capital
investment; and, for their efforts to be tolerably successful, they
must act with approximate rationality in selecting the directions
toward which their enterprise is directed. They must not only
produce growth but tolerably balanced growth. We cannot quite
say that it is necessary for them to act as if they were trying to
maximize profit; for the criteria for private-profit maximization do
not necessarily converge with the criteria for an optimum rate and
pattern of growth in various sectors. But in a growing economy,
over periods longer than the business cycle, economic history is
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The sources of entrepreneurship
reasonably tolerant of deviations from rationality, in the sense that
excess capacity is finally put to productive use. Leaving aside here
the question of ultimate human motivation, and assuming that the
major overhead items are generated, if necessary, by some form of
State initiative (including subsidy), we can say as a first approxima-
tion that some group must successfully emerge which behaves as
if it were moved by the profit motive, in a dynamic economy with
changing production functions.
In this connexion it is increasingly conventional for economists
to pay their respects to the Protestant ethic.* The historian should
not be ungrateful for this light on the grey horizon of formal growth
models. But the known cases of economic growth which theory
must seek to explain take us beyond the orbit of Protestantism.
In a world where Samurai, Parsees, Jews, North Italians, Turkish,
Russian, and Chinese civil servants (as well as Huguenots, Scotsmen
and British north-countrymen) have played the role of a leading elite
in economic growth, John Calvin should not be made to bear quite
this weight. More fundamentally, allusion to a positive scale of
religious or other values conducive to profit-maximizing activities
is an insufficient sociological basis for this important phenomenon.
What appears to be required for the emergence of such elites is not
merely an appropriate value system but two further conditions:
first, the new elite must feel itself denied the conventional routes
to prestige and power by the traditional less acquisitive society
of which it is a part; second, the traditional society must be
sufficiently flexible (or weak) to permit its members to seek material
advance (or political power) as a route upwards alternative to
conformity.
Although an elite entrepreneurial class appears to be required
for take-off, with significant power over aggregate income flows and
industrial investment decisions, most take-offs have been preceded
or accompanied by radical change in agricultural techniques and
market organization. By and large the agricultural entrepreneur
has been the individual land-owning farmer. A requirement for
take-off is, therefore, a class of farmers willing and able to respond
* See, for example, N. Kaldor, `Economic Growth and Cyclical Fluctuations',
Economic journal (March 1954), p. 67.
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The take-off
to the possibilities opened up for them by new techniques, land-
holding arrangements, transport facilities, and forms of market
and credit organization. A small purposeful elite can go a long
way in initiating economic growth; but, especially in agriculture
(and to some extent in the industrial working force), a wider-based
revolution in outlook must come about.
Whatever further empirical research may reveal about the motives
which have led men to undertake the constructive entrepreneurial
acts of the take-off period, this much appears sure: these motives
have varied greatly, from one society to another; and they have
rarely, if ever, been motives of an unmixed material character.
LEADING SECTORS IN THE TAKE-OFF
As suggested at the close of chapter 2, the overall rate of growth of
an economy must be regarded in the first instance as the consequence
of differing growth rates in particular sectors of the economy, such
sectoral growth-rates being in part derived from certain overall
demand factors (for example population, consumers' income, tastes
etc.); in part, from the primary and secondary effects of changing
supply factors, when these are effectively exploited.
On this view the sectors of an economy may be grouped in three
categories:
(i) Primary growth sectors, where possibilities for innovation
or for the exploitation of newly profitable or hitherto unexplored
resources yield a high growth-rate and set in motion expansionary
forces elsewhere in the economy.
(2) Supplementary growth sectors, where rapid advance occurs
in direct response to-or as a requirement of-advance in the
primary growth sectors; for example coal, iron and engineering in
relation to railroads. These sectors may have to be tracked many
stages back into the economy.
(3) Derived-growth sectors, where advance occurs in some fairly
steady relation to the growth of total real income, population,
industrial production or some other overall, modestly increasing
variable. Food output in relation to population and housing in
relation to family formation are classic derived relations of this
order.
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Leading sectors in the take-off
In the earlier stages of growth, primary and supplementary growth
sectors derive their momentum essentially from the introduction
and diffusion of changes in the cost-supply environment (in turn,
of course, partially influenced by demand changes); while the
derived-growth sectors are linked essentially to changes in demand
(while subject also to continuing changes in production functions
of a less dramatic character). In the age of high mass-consumption
leading sectors become more dependent on demand factors than
in the earlier stages, as considered in chapter 6.
At any period of time it appears to be true even in a mature and
growing economy that forward momentum is maintained as the
result of rapid expansion in a limited number of primary sectors,
whose expansion has significant external economy and other secondary
effects. From this perspective the behaviour of sectors during the
take-off is merely a special version of the growth process in general;
or, put another way, growth proceeds by repeating endlessly, in
different patterns, with different leading sectors, the experience
of the take-off. Like the take-off, long-term growth requires that
the society not only generate vast quantities of capital for deprecia-
tion and maintenance, for housing and for a balanced complement
of utilities and other overheads, but also a sequence of highly
productive primary sectors, growing rapidly, based on new produc-
tion functions. Only thus has the aggregate marginal capital/output
ratio been kept low.
Once again history is full of variety: a considerable array of
sectors appears to have played this key role in the take-off process.
The development of a cotton-textile industry sufficient to meet
domestic requirements has not generally imparted a sufficient im-
pulse in itself to launch a self-sustaining growth process. The
development of modern cotton-textile industries in substitution for
imports has, more typically, marked the pre-take-off period, as for
example in India, China and Mexico.
There is, however, the famous exception of Britain's industrial
revolution. Baines's table* on raw-cotton imports and his comment
.on it are worth quoting, covering as they do the original leading
sector in the first take-off (see Table 4)-
* E. Baines, History of the Cotton Manufacture (London, 1835), P. 348.
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The take-off
TABLE 4. Rate of increase in the import of cotton-wool,
in periods of ten years from 1741 to 1831
0
1741-51
8t
1791-1801
67.5
1751-61
21.5
i8oi-ii
39'5
1761-71
25.5
1811-21
93
1771-81
75'75
1821-31
85
1781-91
319'5
From 1697 to 1741 the increase was trifling; between 1741 and 1751 the manufacture,
though still insignificant in extent, made a considerable spring; during the next twenty
years, the increase was moderate; from 1771 to 1781, owing to the invention of the jenny
and the water-frame, a rapid increase took place: in the ten years from 1781 to 1791,
being those which immediately followed the invention of the mule and the expiration of
Arkwright's patent, the rate of advancement was prodigiously accelerated, being nearly
320%: and from that time to the present, and especially since the close of the war, the
increase, though considerably moderated, has been rapid and steady far beyond all
precedent in any other manufacture.
Why did the development of a modern factory system in cotton
textiles lead on in Britain to a self-sustaining growth process,
whereas it failed to do so in other cases? Part of the answer lies in
the fact that by the late eighteenth century the preconditions for
take-off in Britain were very fully developed. Progress in textiles,
coal, iron and even steam power had been considerable throughout
the eighteenth century; and the social and institutional environment
was propitious. But two further technical elements helped determine
the upshot. First, the British cotton-textile industry was large in
relation to the total size of the economy. From its modern begin-
nings, but notably from the 1780's forward, a very high proportion
of total cotton-textile output was directed abroad, reaching 6o %
by the r82o's.* The evolution of this industry was a more massive
fact, with wider secondary repercussions, than if it were simply
supplying the domestic market. Industrial enterprise on this
scale had secondary reactions on the development of urban areas,
the demand for coal, iron and machinery, the demand for
working capital and ultimately the demand for cheap transport,
* The volume (official value) of British cotton-goods exports rose from #355,060
in 1780 to #7,624,505 in 1802 (Baines, op. Cit. P, 350). See also the calculation
of R. C. 0. Matthews, A Study in Trade Cycle History (Cambridge, 1954),
pp. 127-9.
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Leading sectors in the take-off
which powerfully stimulated industrial development in other
directions.*
Second, a source of effective demand for rapid expansion in
British cotton textiles was supplied, in the first instance, by the sharp
reduction in real costs and prices which accompanied the techno-
logical developments in manufacture and the cheapening real cost of
raw cotton induced by the cotton-gin. In this Britain had an advantage
not enjoyed by those who came later; for they merely substituted
domestic for foreign-manufactured cotton textiles. The substitution
undoubtedly had important secondary effects by introducing a
modern industrial sector and releasing, on balance, a pool of foreign
exchange for other purposes; but there was no sharp fall in the real
cost of acquiring cotton textiles and no equivalent rise in real income.
The introduction of the railroad has been historically the most
powerful single initiator of take-offs.t It was decisive in the United
States, France, Germany, Canada, and Russia; it has played an
extremely important part in the Swedish, Japanese and other cases.
The railroad has had three major kinds of impact on economic
growth during the take-off period. First, it has lowered internal
transport costs, brought new areas and products into commercial
markets and, in general, performed the Smithian function of widen-
ing the market. Second, it has been a prerequisite in many cases to
the development of a major new and rapidly enlarging export sector
which, in turn, has served to generate capital for internal develop-
ment, as, for example, the American railroads before 1914. Third,
and perhaps most important for the take-off itself, the development
of railways has led on to the development of modern coal, iron and
engineering industries. In many countries the growth of modern
basic industrial sectors can be traced in the most direct way to the
requirements for building and, especially, for maintaining substan-
tial railway systems. When a society has developed deeper institu-
* If we are prepared to treat New England of the first half of the nineteenth century
as a separable economy, its take-off into sustained growth can be allocated to the period,
roughly, 1820-5o; and, again, a disproportionately large cotton-textile industry based
substantially on exports (that is, from New England to the rest of the United States)
is the regional foundation for sustained growth.
t For a detailed analysis of the routes of impact of the railroad on economic develop-
ment see Paul H. Cootner, Transport Innovation and Economic Development: The Case of
the U.S. Steam Railroads (1953), unpublished doctoral thesis, M.I.T. (Cambridge, Mass.).
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The take-off
tional, social and political prerequisites for take-off, the rapid growth
of a railway system, with these powerful triple effects, has often
served to lift it into self-sustained growth. Where the prerequisites
have not existed, however, very substantial railway building has
failed to initiate a take-off, as for example in India, China, pre-1895
Canada, pre-1914 Argentina, etc.
It is clear that an enlargement and modernization of armed forces
could play the role of a leading sector in take-off. It was a factor in
the Russian, Japanese and German take-offs; and it figures heavily in
current Chinese Communist plans. But historically the role of modern
armaments has been ancillary rather than central to the take-off.
Quite aside from their role in supplying foreign exchange for
general capital-formation purposes, raw materials and food-stuffs
can play the role of leading sectors in the take-off if they involve
the application of modern processing techniques. The timber indus-
try, built on the steam-saw, fulfilled this function in the first phase
of Sweden's take-off, to be followed shortly by the pulp industry.
Similarly, the shift of Denmark to meat and dairy products, after
1873, appears to have reinforced the development of a manufac-
turing sector in the economy, as well as providing a major source
of foreign exchange. And as Lockwood notes, even the export of
Japanese silk thread had important secondary effects which deve-
loped modern production techniques.*
To satisfy the demands of American weaving and hosiery mills for uni-
form, high-grade yarn, however, it was necessary to improve the quality of
the product, from the silkworm egg on through to the bale of silk. In
sericulture this meant the introduction of scientific methods of breeding
and disease control; in reeling it stimulated the shift to large filatures
equipped with machinery; in marketing it led to large-scale organization
in the collection and sale of cocoons and raw silk. ..it exerted steady
pressure in favour of the application of science, machinery, and modern
business enterprise.
The role of leading sector has been assumed, finally, by the
accelerated development of domestic manufacture of consumption
goods over a wide range in substitution for imports, as, for example,
in Australia, the Argentine and, perhaps, in contemporary Turkey.
" W. W. Lockwood, The Economic Development of7apan (Princeton, 1954), PP. 338-9.
56
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What can we say, then, in general about these leading sectors?
Historically, they have ranged from cotton textiles, through heavy-
industry complexes based on railroads and military end-products,
to timber, pulp, dairy products and finally a wide variety of con-
sumers' goods. There is, clearly, no one sectoral sequence for take-
off, no single sector which constitutes the magic key. There is no
need for a growing society to recapitulate, for example, the structural
sequence and pattern of Britain, the United States or Russia. Four
basic factors must be present:
(I) There must be enlarged effective demand for the product
or products of sectors which yield a foundation for a rapid.rate of
growth in output. Historically this has been brought about initially
by the transfer of income from consumption or hoarding to produc-
tive investment; by capital imports; by a sharp increase in the
productivity of current investment inputs, yielding an increase in
consumers' real income expended on domestic manufactures; or
by a combination of these routes.
(2) There must be an introduction into these sectors of new
production functions as well as an expansion of capacity.
(3) The society must be capable of generating capital initially
required to detonate the take-off in these key sectors; and especially
there must be a high rate of plough-back by the (private or
state) entrepreneurs controlling capacity and technique in these
sectors and in the supplementary growth sectors they stimulated to
expand.
(4) Finally, the leading sector or sectors must be such that their
expansion and technical transformation induce a chain of require-
ments for increased capacity and the potentiality for new production
functions in other sectors, to which the society, in fact, progres-
sively responds.
THE TAKE-OFF IN PERSPECTIVE
This view of the take-off is, then, a return to a rather old-fashioned
way of looking at economic development. The take-off is defined
as an industrial revolution, tied directly to radical changes in methods
of production, having their decisive consequence over a relatively
short period of time.
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The take-off
This view would not deny the role of longer, slower changes in
the whole process of economic growth. On the contrary, take-off
requires the massive set of preconditions, going to the heart of a
society's economic organization, its politics, and its effective scale
of values, considered in chapter 3.
What this argument does assert is that the rapid growth of one
or more new manufacturing sectors is a powerful and essential
engine of economic transformation. Its power derives from the
multiplicity of its forms of impact, when a society is prepared to
respond positively to this impact. Growth in such sectors, with new
production functions of high productivity, in itself tends to raise
output per head; it places incomes in the hands of men who will
not merely save a high proportion of an expanding income but who
will plough it into highly productive investment; it sets up a chain
of effective demand for other manufactured products; it sets up
a requirement for enlarged urban areas, whose capital costs may
be high, but whose population and market organization help to
make industrialization an on-going process; and, finally, it opens
up a range of external economy effects which, in the end, help to
produce new leading sectors when the initial impulse of the take-off's
leading sectors begins to wane.
In non-economic terms, the take-off usually witnesses a definitive
social, political, and cultural victory of those who would modernize
the economy over those who would either cling to the traditional
society or seek other goals; but-because nationalism can be a social
solvent as well as a diversionary force-the victory can assume forms
of mutual accommodation, rather than the destruction of the tradi-
tional groups by the more modern; see, for example, the role of
the Junkers in nascent industrial Germany, and the persistence of
much in traditional Japan beyond r88o. By and large, the main-
tenance of momentum for a generation persuades the society to
persist, and to concentrate its efforts on extending the tricks of
modern technology beyond the sectors modernized during take-off.
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DEFINITION AND TIMING
After take-off there follows what might be called the drive to matu-
rity. There are a variety of ways a stage of economic maturity might
be defined : but for these purposes we define it as the period when
a society has effectively applied the range of (then) modern techno-
logy to the bulk of its resources.
In terms of sectoral development the drive to maturity sees the
industrial process differentiated, with new leading sectors gathering
momentum to supplant the older leading sectors of the take-off,
where deceleration has increasingly slowed the pace of expansion.
After the railway take-offs of the third quarter of the nineteenth
century-with coal, iron, and heavy engineering at the centre of
the growth process-it is steel, the new ships, chemicals, electricity,
and the products of the modern machine-tool that come to dominate
the economy and sustain the overall rate of growth. This is also,
essentially, the case with the later Russian drive to maturity, after
1929. But in Sweden after 1890 it was the evolution from timber
to wood-pulp and paper; from ore to high-grade steel and finely
machined metal products. The leading sectors in the drive to
maturity will be determined, then, not merely by the pool of techno-
logy but by the nature of resource endowments; by the character
of the take-off, and the forces it sets in motion; and it may be shaped
to a degree, as well, by the policies of governments.
Although much further detailed analysis would be required to
apply this definition rigorously, we would offer the following sample
as rough symbolic dates for technological maturity:*
Great Britain
1850
Sweden
1930
United States
1900
Japan
1940
Germany
1910
Russia
1950
France
1910
Canada
1950
* The reader may wonder why we have given only rounded, symbolic dates for
arrival at maturity whereas more precise dates are offered in chapter 4 for the beginning
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e rive to maturity
The oddity referred to in chapter 2 is to be noted again. These
dates, independently derived, come more or less sixty years after the
dates established, on quite different criteria, for the beginning of
take-off. There is no body of argument or evidence we can now offer
to make rational such a uniformity. But, as suggested earlier, it may
be that when we explore the implications of some six decades of
compound interest applied to the capital stock, in combination with
three generations of men living under an environment of growth,
elements of rationality will emerge.
SECTORAL PATTERNS OF MATURITY: RAILWAYS AND
THEIR AFTERMATH
In Great Britain the take-off had centred on the direct and indirect
consequences of the rapid expansion in cotton textiles, including
developments as distant from Lancashire as Eli Whitney's invention
of the cotton-gin and such partially independent, but concurrent,
developments as the refinement of the steam-engine and of an iron
technology based on British ore and coke. The British road to
maturity consisted not merely in the large-scale exploitation, after
1815, of the mutually reinforcing innovations of Arkwright, Watt
and Whitney, but also in the railway booms of the 183o's and
1840's. These surges brought the British coal, iron, and heavy
engineering industries to technical maturity by the mid-nineteenth
century.
By, let us say, the Exhibition of 1851, Britain had mastered and
extended over virtually the whole range of its resources all that the
then modern science and technology had to offer an economy with
of take-off. The reason for this asymmetry derives from the fundamental theoretical basis
of the stages-of-growth analysis, presented at the close of chapter 2. The stages-of-growth
take their reality from rapid expansion phases in particular leading sectors. The initial
dates for take-off are generally the moment when a clearly marked general expansion was
launched based on rapid growth in particular industries. For the pre-1914 era, for
example, the initial date for take-off often marks the beginning of a powerful cyclical
expansion. As will emerge, arrival at maturity did not necessarily bring with it the
prompt launching of the next stage, with new leading sectors. There was often an interval
before the age of high mass-consumption was launched: an interval used to bring
consumption up to the level necessary for this stage or passed in less wholesome ways,
for example in relative stagnation or in military ventures. With the launching of the stage
of high mass-consumption more precise dating again becomes possible; for new leading
sectors again clearly emerge, with high momentum.
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the resources (and the population-resource balance) of mid-nine-
teenth-century Britain. In various specific directions other nations
exhibited something of a lead over Britain, even at mid-century:
the Americans, for example, foreshadowing a virtuosity with labour-
saving machinery-notably farm machinery; and the Germans, in
chemicals. But at the Crystal Palace Britain was unique in reflecting
a well-rounded mature economy.
Less than seventy years from the launching of the canal and cotton-
textile boom of the 178o's, when the industrial revolution, narrowly
defined, may be said to have begun, Britain had wholeheartedly
transformed itself into an industrial nation-its commitment con-
firmed by the Repeal of the Corn Laws. Well ahead in most, but
not in all sectors, with respect to the other societies whose pre-
conditions had been well advanced during the eighteenth century,
Britain was about to divert a substantial proportion of its capital
and technical know-how in a quarter-century of diffusion abroad of
the iron, heavy engineering, and construction technology on which
railway building depended.
And, as noted in chapter 4, the take-offs of the United States,
France, and Germany, all completed by 1873, were thus based
squarely on railways rather than cotton textiles. For these nations
the path to maturity lay in a complex of industries whose possibilities
were, in part, unfolded by the nature of the railway take-off. For
just as the railway boom in Britain was sparked by the success of
the Manchester-Liverpool line, so the requirements of railway main-
tenance placed a high premium on the production of cheap and good
steel, whose rails would not wear out as fast as the iron rails. It was
largely from this incentive that the modern steel industry was built;
in a sense steel flowed from the railroads, as the railroads had flowed
from the requirements and consequences of modern cotton-textile
industries. But once cheap, good steel was available, many further
uses unfolded, including the efficient boiler and the modern steel
ship; the machine-tool; new equipment for heavy chemical manu-
facture; and new forms of urban construction.
The history of the engineering profession thus tells in compressed
form the story of the unfolding, leading sectors. Where its bases were
not military, the modern engineering profession took its start in
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e rive to maturity
laying out roads and canals, in designing water-pumps for coal
mines, and making textile machinery, including the means to power
that machinery. Drawing on strands from all these early experiences
the engineers moved on to railroads; and they then fanned out, in
a process of differentiation, into mechanical, chemical, and electrical
engineering specialities as well as such sub-specialities as naval
construction and civil engineering. Of all the steps in the sequence
of modern engineering the railway was, almost certainly, the most
important. Just as the financing and management of the railroads
set many patterns for large-scale industrialization on a wider front,
so also, it was in the technical experience of building and operating
the railways that a good part of the foundations were laid for the
march of the Western world into maturity.
For the United States, Germany, and France, then, the post-
take-off stage was concentrated on the development of post-railway
technology, much of which was an elaboration of insights derived
from earlier technical experience. The rise of steel-and all its
uses, massive and refined-is certainly the central symbol of the
post-railway movement to maturity on the continent of Western
Europe and in the United States. And Britain, of course, joined fully
in the elaboration and application of the post-railway technology.
But what of the later-comers of the nineteenth century? What,
for example, of Sweden, of Japan, and Russia, whose take-offs begin
between, say, 1870 and 18go?
SWEDEN
For Sweden the take-off of the i87o's and i88o's had been based
primarily on a modern timber export industry and railway construc-
tion. The turning point into maturity comes in the early i8go's.
And it comes in the form of a challenge: a depression marked by
a sagging away of Sweden's export markets on which a good deal
of its take-off had been built. This is a quite normal occurrence.
The take-off is, structurally, a surge in output in a relatively few
sectors. It is of the nature of the investment process that these
sectoral surges should be overdone. Indeed, this is the essence of
the trade cycle. Once having overshot the mark in the key sectors of
a first take-off surge, it is necessary for the economy to regroup and
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we en
re-allocate its resources for a resumption of growth in new leading
sectors. Structurally this is the nature and the historic function
of a trade depression. It has been normal, therefore, for the take-off
to end with a trade depression; and one measure of take-off having
been achieved is a society's ability to regroup its resources effectively
and to accelerate expansion in a new set of leading sectors.
Sweden of the 189o's responded positively to this structural chal-
lenge. There was a shift from timber into wood-pulp, from the export
of unplaned to planed board and matches. The Norrland ores began
to be systematically exploited by modern methods. From pig-iron
there was a surge into the highly refined steel and engineering indus-
tries. Hydro-electric sources of power were systematically exploited,
laying the basis for an electric machinery industry of the highest
skill, which was later to help the Swedish railways convert to electri-
city from coal. Even in agriculture there was a shift-in direction
similar to that in Denmark-from grain to animal and dairy farming
of higher productivity. And over a wide range Sweden began to
produce at home manufactured commodities hitherto imported. In
Lindahl's phrase, the 18go's marked for Sweden the beginnings of
a phase of `differentiation of production'* which continued down
to 1914 and was, in fact, heightened by the requirements of Sweden's
somewhat isolated neutrality of the First World War.
The essence of this transition was the systematic application to the
rich but narrow mix of Swedish natural resources of the best methods
modern technology could then offer. By the 189o's Swedish society
had been transformed in such a way over the previous generation as
to generate a corps of entrepreneurs and technicians sufficient to
man this push along a wide front. So, by the end of the 1920's,
Sweden had become a fully mature society, in terms of its own re-
sources and ofa modern technology to which it made significant contri-
butions. It was ready for the welfare state and the gadgetry of the age
of durable consumer goods.
JAPAN
From this perspective, the story of Japan in its broad outline-but
timed with about a decade's lag-bears a family resemblance to
that of Sweden; and this is so despite a population-resource balance
* National Income of Sweden, vol. 1, especially pp. 122, 263-4, 281, and 314-15.
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The drive to maturity
distinctly less advantageous than that of Sweden, and despite a cul-
tural and political setting that, at first glance, could hardly be less
similar. Japan, too, represents a remarkably purposeful surge to
maturity, in which a relatively narrow array of natural resources
was harnessed by a diligent, strongly motivated population to the
best that modern technology could offer in a sixty-year surge: from,
say, 188o to 1940.
Just as the sectoral composition of the Japanese take-off differs
from the Swedish case, so also does the mixture of industries which
carried Japan to maturity in the 1930's.
The Japanese take-off was made possible by a series of prior and
concurrent developments in agriculture that did the three essential
things defined in chapter 3 as agriculture's mission in industrial
development: from the side of supply, agriculture provided in-
creased food and fibres for an enlarged population, for accelerated
urbanization, and to earn foreign exchange; from the side of demand,
the rise of productivity in rural areas provided Japanese industry
with enlarged markets and encouragement for domestic industry;
and finally, from the side of capital supply, the commutation of the
feudal rents, and the diversion of this income stream to the govern-
ment gave the Japanese modern sector an essential initial infusion
of capital, until plough-back could take over a good part of industrial
financing.
But despite the new technical and market skills that accompanied
these agricultural developments, they alone could not have lifted
Japan into take-off. In the 188o's and i 8go's, a whole series of new
industries took hold, initially sparked by government initiative, but
increasingly turned over to private enterprise, as new men emerged
ready to carry the responsibilities and risks of administration and
ownership: the take-off-let us say between i88o and igoo-was
built on railways, on ship-building, on cotton manufacture (initially
based on imported cotton), on silk cultivation and manufacture, on
coal and pig-iron, and then, in the i8go's, on a surge of military
outlays, that helped to build up the engineering industries.
In the i8go's, too, the beginnings of a modern chemical industry
can be discerned. But the rise of chemicals, with their crucial role
in Japanese agriculture, belongs with the process of industrial
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differentiation-the advance on a broad front-which characterizes
the first four decades of the twentieth century. For despite high
growth-rates in the previous two decades, as of 1900 Japan was still
a society whose modern industrial sector was small and, relatively,
still dominated by textiles. It was between r9oo and 192o-notably
stimulated by the First World War-that the Japanese industrial
sector began to fan out into chemical fertilizers, steel, and electrical
equipment.
Lockwood concludes in a formulation quite close to our definition
of maturity: `By the end of the I9zo's...the processes of moderniza-
tion and growth had extended in varying degrees to all sectors of
the economy.' But it was only in the 1930's that the engineering
industries came into their own, under the stimulus of the develop-
ment of Manchuria and war outlays and preparations. It was only
in this decade, for example, that the value of output in metals,
machinery, and chemicals at last came to outrank textiles in their
contribution to Japanese gross national production.*
Thus, starting its take-off about thirty years after the major
nations of continental Europe, ten years after Sweden, Japan arrived
at maturity just about in phase; that is, about three decades after
France and Germany, a decade after Sweden.
RUSSIA
Now a few words about the Russian case, which is considered at
greater length in chapter 7, in relation to that of the United States.
The Russian preconditions reach back, of course, a long way,
at least to the time when Peter returned from the West with the
conviction that Russia had to modernize; but the traditional society
gave way slowly. It was shocked by Napoleon; and again by the
Crimean War; and its bases were slowly eroded by the spreading
knowledge of all that was going forward in the West, during the
first half of the nineteenth century. With 1861, and the freeing of
the serfs, the process of creating the preconditions for take-off
accelerates: both technically-in the build-up of social overhead
capital and the bases for modern industry-and in terms of the
* K. Ohkawa et al., The Growth Rate of theJapanese Economy since 1878 (Tokyo, 1957),
pp. 81-3-
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ideas, attitudes, and aspirations of various groups of Russians. Then,
by 189o or so, the Russian take-off begins.
Like the concurrent Canadian take-off, the Russian take-off was
aided by the rise in grain prices and the export demand for grain
which occurred in the mid-i89o's; for it was this rise that made
attractive the laying of vast railway nets in the two countries, just as,
in the I 840's, the potato famine in Ireland, and the pressure on
Western Europe grain acreage in general, set the stage for the rail-
roadization of the American mid-West in the 1850's. And it was
the railway, with its multiple impact on growth, that took Russia
into its take-off by the outbreak of the First World War. Coal,
iron, and engineering surged ahead, as well as a modern cotton-textile
industry to meet the expanded demand at home. In addition, the
Baku petroleum industry expanded to its natural limit; and the
Ukrainian coal-iron complex was brought to life as were the Ruhr,
and the Pennsylvanian and mid-Western American complexes a half-
century or so earlier.
By 1914 Russia was producing something like five million tons
of pig-iron, four million tons of iron and steel, forty million tons of
coal, ten million tons of petroleum and a food-grain export surplus
of about twelve million tons. Despite its ultimate internal collapse
and defeat, during the First World War, Russia was able to mount,
supply, and sustain for three years of terrible casualties an enormous
army, in modern combat, including artillery and aircraft of con-
siderable sophistication.
The Communists inherited, then, an economy that had taken off;
and one which had developed a substantial export surplus in
agriculture.
It took about a decade for Lenin and his successors to reorganize
this system to their taste, and to get it back to its previous peak
output; and then came the series of Five Year Plans. They are to
be understood not as a take-off but as a drive to maturity: the process
of industrial differentiation, the advance to modernization on a wide
front.
Stalin was the architect not of the modernization of a backward
country, but of the completion of its modernization. Stalin was
Witte's successor in a quite direct and technical sense.
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With certain specific differences stemming from the objectives
of the Communist leadership, the broad pattern of Soviet economic
growth between 1929 and, say, Stalin's death is similar to that of
Western Europe and the United States of the pre-1914 decades:
this was the post-railway age in Russia, the age of steel, machine
tools, chemicals, and electricity. The Russian surge to maturity
came, however, at a time when the back-log of accumulated techno-
logical possibilities included developments (notably in electronics,
aeronautics, and atomic energy) which were not available a few
generations earlier, so that as Russia drew technologically level, it
was level at a different range of technology from that of the powers
which had reached maturity by 1914?
In its broad shape and timing, then, there is nothing about the
Russian sequence of preconditions, take-off, and drive to techno-
logical maturity that does not fall within the general pattern;
although like all other national stories it has unique features, which
will be considered in later chapters.
SOME PROBLEMS IN DEFINING MATURITY
The meaning of this technological definition of maturity-and its
limits-may be better perceived by considering briefly a few
specific problems posed by the particular dates here chosen for
maturity.
Is France, for example, on the eve of the First World War, to
be regarded as technologically mature, despite its large, comfortable
but technologically backward peasantry and its tendency to export
large amounts of capital, despite certain technologically lagging
industrial sectors? The case can, of course, be argued either way;
but it does dramatize the need to allow, within the present definition,
for regions of a nation or sectors of the economy to resist-for what-
ever reason-the full application of the range of modern technology.
And this turns out to be generally true of nations which, by and large,
one would judge mature. The United States of 1900 contained,
after all, the South, whose take-off can be dated only from the 1930's;
and contemporary mature Canada contains the still-lagging province
of Quebec. The technological definition of maturity must, then, be
an approximation, when applied to a whole national society.
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Japan as of 1940 poses a somewhat different problem. Can one
rate as mature an economy with so labour-intensive an agricultural
sector? The answer is affirmative only if one is prepared to take as
given-outside the definition of maturity-a society's decision about
its population size. Within the Japanese population-resource balance,
its agriculture, with extraordinary refinement in the use of both
water and chemical fertilizers, does indeed reflect a high form of
modern technological achievement, even if modern farm machinery,
designed to save labour, is capable of only limited use.
What about contemporary Russia, with more than 40 % of the
working force still in agriculture and much modern technology still
unapplied in textiles and other consumers' goods industries? Here
again, the present definition of maturity would not predetermine
how a society chooses to allocate its technological capabilities. By
and large contemporary Russia is to be judged a mature economy
despite the fact that its leaders have chosen for political reasons
to bear the costs of a low-productivity agriculture and have chosen
to concentrate capital and technology in sectors other than manu-
factured consumption goods. Put another way, the obstacles to full
modernization of the Russian economic structure do not lie in the
supply of capital, entrepreneurial administrators, or technicians.
Finally, there is the case of Britain, mature on this definition as
early, say, as the Crystal Palace Exhibition. How is one to deal
with the long interval between the stage of its maturity, in terms
of the effective application of mid-nineteenth-century technology,
and the next stage of growth : the age of high mass-consumption,
when the radical improvements in housing and durable consumers'
goods and services become the economy's leading sectors?
The reasons for the gap in the British sequence lie in the nature
of this next stage. The age of high mass-consumption represents a
direction of development a society may choose when it has achieved
both technological maturity and a certain level of real income per
head. Although income per head-and usually consumption per
head-will rise in the drive to maturity, it is evident that there is no
fixed connexion between technological maturity and any particular
level of real consumption per head. The course of these variables
after take-off will depend primarily on the society's population-
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Some problems in defining maturity
resource balance and on its income distribution policy. The process
of growth, by definition, raises income per head, but it does not
necessarily lead to uniformity of per capita income among nations
or, even, among regions within nations; and, in Canada and certain
other cases, we even have societies which have entered into the stage
of high mass-consumption before technological maturity was attained.
There are-and there are likely to be-technologically mature
societies that are, so to speak, both rich and poor. When historical
data on national income are developed to permit systematic com-
parison, we are likely to find that incomes per head, at maturity,
vary over a considerable range. Mid-century Britain would, pre-
sumably, stand low in that range. The improvements in real income
and consumption per head that occurred in the second half of the
nineteenth century took the form of improvements in diet, housing,
urban overhead capital, and other forms of increased welfare which,
while substantial, did not create within Britain new leading indus-
trial sectors-at least down to the bicycle boom of the i 8go's.*
* In a different perspective, it is possible to dismiss the gap between mid-nineteenth
century British technological maturity and twentieth-century high mass-consumption
as a simple product of technological history; that is, the technology of modern transporta-
tion, suburban housing, and household gadgetry did not exist in, say, the third quarter
of the nineteenth century. And for many purposes that is a quite satisfactory way to
look at the matter.
On the other hand, three considerations argue that it is also, for other purposes, worth
regarding the British sequence in the second half of the nineteenth century as involving
a gap. First, technology itself is, in its widest sense, not an independent variable (W. W.
Rostow, Process of Economic Growth, especially pp. 83-6). If the level of British incomes
and consumption had been high enough, incentives might have existed which would
have yielded a quite different evolution of technology. Second, the phenomenon of
a gap in time between the attainment of technological maturity and the age of high mass-
consumption-the existence of relatively poor as well as rich mature societies-is more
general than the British case. And a view of Britain in the second half of the nineteenth
century as in the process of closing the gap may, for certain purposes, be linked suggestively
to similar transitions in other societies. Third, much in British social, political (and,
even, entrepreneurial) history in the second half of the nineteenth century is typical of
transformations in attitude and policy which have occurred in other societies after
technological maturity has been attained: the beginnings of serious welfare legislation,
with the Ten Hours Bill; the pressures and reflexions which led the society to accept the
Second and Third Reform Bills; the emergence of political coalitions which damped the
power of industrial interests; the mounting intellectual attention and public sentiment
focused on problems of social reform, laying the bases for the pre-s914 Liberal measures
and the emergence of the Labour Party. In short, even narrowly examined, much in
British history in the period 1850 -1500 is illuminated by the notion that this was a society
which took its technological virtuosity as given and, at decorous rate, proceeded to
explore, at the margin, objectives beyond.
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And so Britain, after Crystal Palace, moved onward in growth at
a modest pace, using its capital and entrepreneurship substantially
to help acquire resources with which it was not sufficiently endowed
and to help build the preconditions and assist the take-offs of other
societies, suffering along the way some of the costs of having led
in the process of industrialization, to enter the new century with
most of its initial lead gone. Put another way, the achievement of
maturity by Western Europe and the United States early in the
twentieth century, at the then existing level of technology, found
Britain in a roughly equivalent position : while the newer nations
had moved from take-off to maturity in the sixty years before the
First World War, Britain had moved, in terms of income levels,
from being a relatively poor mature society to being a relatively
rich mature society.
MATURITY IN PERSPECTIVE
Now a few words about the non-economic aspects of the drive to
maturity. Look backwards a moment.
The period of preconditions is the time in the life of a society
when the traditional structure is undermined piecemeal, while
important dimensions of the old system remain. Just before and
during the take-off, the new modern elements, values, and objectives
achieve a definitive break-through; and they come to control the
society's institutions; and then, having made their point, with their
opponents in retreat or disarray they drive to carry the process of
modernization to its logical conclusion. Post-1815 Britain, post-
Civil War America, Bismarck's Germany after 187o and slower-
moving France, too, in the same period, Japan from 1900 to 1920,
Stalin's Russia of the Five Year Plans-these were all societies run
by men who knew where they were going. They were caught up in
the power of compound interest and in the possibilities of trans-
forming one sector after another of the society by extending the
tricks of modern technology. By and large these were confident
periods in the life of societies, where there were big palpable jobs
to be done; where the results could quickly be seen; and the society,
reluctantly or otherwise, gave its industrial leaders-who were also
sometimes politicians-their head. The course of real wages for the
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urban and agricultural worker, and his fate in a larger sense, varied
as among these societies during the drive to maturity-from com-
fortable Sweden to Stalin's forced-labour society; but generally
speaking the power of those who controlled capital and technology
was not seriously opposed. The traditional society was defeated; and
those groups and interests who would interpose values other than
the extension of modern techniques had not formed up and made
themselves effective.
Nevertheless the path to maturity had within it the seeds not of
its undoing-for this analysis is neither Hegelian, nor Marxist-but
the seeds of its own modification.
Specifically, three things happened as maturity moved towards its
close.
First, the working force changed. It changed in its composition,
its real wage, its outlook, and in its skills. Before take-off perhaps
75 % of the working force is in agriculture, living on a low, if not
merely survival, real wage; by the end of take-off the figure may
drop to 40 %; and by maturity, it has in many cases fallen to 20 %.
But maturity means not only that the urban population grows, but
that the number of office and semi-skilled workers increases, and
the number of highly trained technicians and professionals as well.
This is not merely-or even necessarily-a shift from unskilled to
skilled labour. Sometimes the contrary is the case. It is a shift
to those who design or handle complex machines, keep office records
and manage big bureaucracies, rather than lay railway tracks or
puddle steel, or handle rather crudely masses of unskilled labour.
These people are not fresh in from the countryside. They are the
increasingly literate and knowledgeable children of the city and
the world of technology. Moreover the real wages of workers are
not only likely to be rising but the workers are also likely to perceive
that, if they organize and make their presence felt in the society,
they can probably achieve even higher wages and greater security
of employment and welfare.
In short, the process of moving to maturity lays the basis for
the kind of political and social pressures that led to that long succes-
sion of humane modifications starting with the factory legislation
of the i840's in Britain down through Bismarck's concessions, Lloyd
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George's reforms, the American Progressive era; and, if you like,
to the concessions made to the Russian consumer, technician, and
bureaucrat since 1953.
Second, the character of the leadership changes; from the buc-
caneering cotton-, railway-, steel- and oil-baron to the efficient
professional manager of a highly bureaucratized and differentiated
machine.*
Third, related to but transcending the first two changes, the
society as a whole becomes a little bored with the miracle of indus-
trialization. Just as Soviet society has protested against the imposi-
tion upon it of endless novels in which a man's love for his tractor
or machine-tool is the central theme, so in many subtle ways the
Western world articulated, late in the nineteenth century, its second
thoughts about industrialization as a unique and overriding objec-
tive: via the Fabians and the muck-rakers, the Continental social
democrats, Ibsen and Shaw and Dreiser and, indeed, via Mill and
Marshall. It is here, too, as a protestant against the human costs
of the drive to maturity, that Marx fits as well, as we shall see in
chapter lo.
These changes in the real income, structure, ambitions, and out-
look of the society, as maturity comes to be achieved, pose a searching
problem of balance and choice around the question: how shall this
mature industrial machine, with compound interest built into it,
be used? To offer increased security, welfare and perhaps leisure
for the citizens as a whole? To offer enlarged real incomes, including
the manufactured gadgets of consumption, to those who can earn
them? To assert the stature of the new mature society on the world
scene? For, as we shall see in chapter 8, maturity is a dangerous time
as well as one which offers new, promising choices.
* Few exercises are likely to be more fruitful for the understanding of modern eco-
nomic history than a comparison of the first three generations of leadership in growing
economies; the relatively modest, creative fellows who get the growth started; the hard-
handed task-masters who, perceiving the scale ofpossibilities, drive the society to maturity,
if necessary despite itself; and the comfortable, cautious committee-men who inherit and
manage the economy as a profession while the society seeks objectives which include
but transcend the application of modern technology to its resources.
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THE AGE OF
HIGH MASS-CONSUMPTION
THE THREE-WAY CHOICE
Chapter 5 argues that, as technical maturity was approached, men
began to take for granted what they were born to, in this case
a well advanced industrial society; and their minds turned in-
creasingly to reconsider the ends to which the mature economy
might be put.
In a quite technical sense, the balance of attention of the society,
as it approached and went beyond maturity, shifted from supply
to demand, from problems of production to problems of consump-
tion, and of welfare in the widest sense.
In this post-maturity stage there have been three major objectives
which, to some degree, have competed for resources and political
support, three directions in which welfare, in this wide sense, might
be increased.
First, the national pursuit of external power and influence, that
is, the allocation of increased resources to military and foreign
policy. It has been a quite consistent feature of modern history for
some groups to look out beyond their borders for new worlds to
conquer, as their societies approached technical maturity. And in
some cases, by one route or another, they gained effective political
control over national policy.
A second direction for the use of the resources of a mature economy
we can call the welfare state; that is, the use of the powers of the
State, including the power to redistribute income through progressive
taxation, to achieve human and social objectives (including increased
leisure) which the free-market process, in its less adulterated form,
did not achieve. During the take-off and in the drive to maturity,
those elements in what Lionel Robbins calls the individualist-
utilitarian creed which did not lead to a maximization of output were,
relatively, suppressed, the degree of their suppression varying from
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society to society. As maturity approached, these more humane
objectives asserted themselves with increased force. Men were pre-
pared, in a sense, to take risks with the level of output-and the
incentives in the private sector-in order to cushion the hardships
of the trade-cycle; in order to increase social security; in order to
redistribute income; in order to shorten the working day; and,
generally, to soften the harshness of a society hitherto geared pri-
marily to maximizing industrial output and the spread of modern
technology.
The third possible direction opened up by the achievement of
maturity was the expansion of consumption levels beyond basic food,
shelter, and clothing, not only to better food, shelter, and clothing
but into the range of mass consumption of durable consumers'
goods and services, which the mature economies of the twentieth
century can provide.
Each society which has created for itself the possibility and neces-
sity of making a choice among these objectives-by attaining techno-
logical maturity-has struck a different balance, unique in degree,
at least. The uniqueness of the balance was determined in each case
by geography, the old culture, resources, values, and the political
leadership which dominated it at various intervals beyond maturity.
A good deal of American and Western European history since
about 19oo, Japanese history since the 1930's, and even Russian
history since Stalin's death, can be told in terms of the problem
of choice posed by the attainment of maturity and in terms of the
different balances struck among these three objectives, at different
times.
Since the United States was the first of the world's societies to
move sharply from maturity into the age of high mass-consumption
we shall begin by tracing briefly and schematically how the balance
among these alternatives was struck, in the sequence of American
history over the past half-century. We shall examine this sequence
in four phases: the progressive period, the 1920's, the great depres-
sion of the 193o's, and the post-war boom of 1946-56.
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THE AMERICAN CASE
Phase One: The Progressive Period, 1901-z6
First, a few words about the progressive period; that is, the period
from, roughly, the accession of Theodore Roosevelt in 1901 to the
engulfment of Woodrow Wilson's administration in the problems
of the First World War.
Although McKinley had easily won the election of 1goo, with a
stance that looked backward to the sequence of Republican admini-
strations which had dominated the drive to maturity after the Civil
War, American life in a wider sense had been actively preparing
itself for a shift in the balance of its objectives; and this was revealed
by the popularity of Theodore Roosevelt's style and rhetoric, as well
as by the clear-cut bipartisan defeat of Taft, and all he then appeared
to represent, in the election of Ig12.
The progressive objectives had, then, fifteen years of relative
dominance over domestic policy; and they left their mark. By 1916
the United States had accepted the most revolutionary of all forms
of economic policy, the progressive income-tax; it had created a
climate in which big business curbed itself or was, to a degree,
curbed; the unions were given explicitly the right to organize,
outside the Anti-Trust Act; a Federal Reserve System was created,
in part to permit a degree of public control to be exercised over the
trade cycle. In some of the states even more powerful measures of
social control were introduced. But the progressive period was more
a matter of mood and the direction of policy than of drastic re-
allocation of resources.
In these years Americans made another significant decision about
the direction of national affairs. In the 18go's a widespread mood
was generating that the United States had, in some sense, become a
mature world power, and that it was time for it to play a major role
on the world scene; to move out from behind the protective barrier
represented by the Monroe Doctrine and the implicit deal with
the British, in which the British navy shielded the United States
from the vicissitudes of the Eurasian balance-of-power game. And
Theodore Roosevelt, architect of the seizure of the Philippines and
hero of the Spanish-American War, pressed forward this sense of
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emergence and, to a degree, of assertion on the world scene in his
two administrations.
But the so-called `large view' symbolized by Theodore Roosevelt
failed to take hold. The Philippines were kept; but Americans, having
been tempted, and fallen a bit from what they conceived to be
isolationist grace, in the end turned their backs on the acquisition
of empire. In foreign policy they opted for a version of the British
Liberal rather than the British Conservative tradition, in the pro-
gressive period-quite explicitly so in the figure of Wilson.
American resources, then, did not flow in significantly increased
volume either to social services or to military outlays; although the
progressive legislation, the Great White Fleet, and the increased
role of government in American society were facts.
American resources did, however, flow increasingly into the third
post-maturity alternative-into new dimensions of consumption :
a trend damped by the rise in urban living costs down to 1920, but
palpable in the next major phase, that is, in the boom of the 1920's.
Phase Two: The 1920's
The American 1920's are generally now studied as a period of tragic
isolation; as the prelude to severe depression; or as a bizarre social
era of bath-tub gin, jazz, mah jong, glamorous athletes, distinguished
novelists, and the Charleston.
But that decade is also to be understood as the first protracted
period in which a society absorbed the fruits and consequences of
the age of durable consumers' goods and services.
Let us examine now a few figures which suggest the character of
the change proceeding in American society, and in its economy,
over this era of high mass-consumption of which the 1920's is the
centre-piece.
First, there was the rise of a new middle class. Between igoo and
1940 the number of farmers in the United States declined. Those
in manufacture, construction, and transport-including skilled wor-
kers-rose about in proportion to the total rise in the working force.
But semi-skilled workers increased more than twice as rapidly as
the working force as a whole; professional people and office workers
three times as rapidly-as the working force as a whole. The era of the
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professional technician, and of the skilled and semi-skilled worker
had come; and this trend in the structure of the working force has
proved virtually universal to all post-maturity societies.
Now where did this population, oriented increasingly towards
the provision and enjoyment of consumers' goods and services, live?
The answer is that the population was not only increasingly
urban, but increasingly suburban. In the 1920's the American
population as a whole increased by 16 %. Those living in the centres
of cities increased by 22 %. But those living in the satellite areas-
the suburbs-increased by 44%.
What then happened to manufacturing output? Fabricant has
arrayed the increases in physical output in the United States between
1899 and 1937 by order of increase. Automobiles lead the list
with an increase of 18o,ioo%; cigarettes, petroleum, milk, beet-
sugar are all over loon%; cement, canned fruits and vegetables are
only a little under looo%.*
What does all this add up to? The United States took to wheels.
This was quite truly the age of the mass automobile. With the auto-
mobile the United States began a vast inner migration into newly
constructed, single-family houses in the suburbs; and these new
houses were filled increasingly with radios, refrigerators, and the
other household gadgetry of a society whose social mobility and
productivity had all but wiped out personal service. Within these
houses Americans shifted their food consumption to higher-grade
foods, increasingly purchased in cans-or, later, frozen.
Automobiles, single-family houses, roads, household durables,
mass markets in higher-grade foods-these tell a good deal of the
story of the transformation of American society in the 1920's, a trans-
formation which supported the boom of the 1920's and which altered
the whole style of a continent's life, down to its courting habits.
Phase Three: The Great Depression
Then came, of course, a decade's severe and protracted depression.
We shall not consider at length here the causes of the onset of
depression or the reasons for its extraordinary depth, except to
* S. Fabricant, The Output of Manufacturing Industries, r899-x939 (NewYork, 1940),
p. 89.
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e age o ag mass-consumption
say this much: in its onset, the depression of 1929 was a perfectly
normal cyclical down-turn; the leading sectors of the. boom were
wearing a little thin, notably in housing, stimulated by the housing
back-log built up during the First World War, but weakened by
the deceleration in population growth and family formation. The
depression went abnormally deep because the institutions of credit,
at home and abroad, broke down, like a series of collapsing floors,
grinding the cycle at each stage of collapse to a lower point, through
its effects on income, confidence, and expectations.
The length of the depression in the United States-as opposed
to its depth-deserves rather more comment; for it relates directly
to the stage of growth, to the era of high mass-consumption, into
which the United States had entered.
Although many ancillary forces undoubtedly played a part, the
central reason for the intractability of the American depression,
which still left 17% unemployed on the eve of the Second World
War, was that the leading sectors of this phase of American growth
required full employment and an atmosphere of confidence before
they could become activated again.
What were those leading sectors in the American age of high
consumption? They were, once again, the automobile, suburban
home-building, road-building, and the progressive extension of the
automobile and other durable consumers' goods to more and more
families. When, in earlier historical stages, the momentum of growth
hinged on the continued extension of railroads, or on the introduc-
tion of other cost-reducing industrial processes-on the side of
supply-investment could be judged profitable at relatively low
levels of current consumers' demand. But when investment comes
to be centred around industries and services based on expanding
consumption, full employment is needed, in a sense, to sustain full
employment; for unless consumption levels press outward, capacity
in consumers' goods industries and those supplying them with
inputs will be under-used, and the impulse to invest will be weak.
The horizons of American industry lowered radically in the 1930's,
and appeared almost to stabilize at a low level.
When, in the nineteenth century, steel went mainly into railways
or the new steel ships, the demand for steel was a reflex of what
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some economists like to call exogenous investment; in the age of
high consumption, when the demand for steel is, let us say, from
the automobile firms and canning industries, the demand for steel
becomes a reflex of endogenous investment-of the rise of incomes,
of the accelerator, one may say.
On this view the Second World War was a sort of deus ex machina
which brought the United States back up to full employment; and
in the context of the post-war world-its institutional arrangements
drastically altered by the New Deal and such legislation as that put
through for veterans' housing-the United States went on to round
out the durable consumers' goods revolution in a decade of chronic
full employment between, say, 1946 and 1956.
During the depression, American society did more, of course,
than merely experience a depression. When the engine of growth
based on the automobile, suburbia, and durable consumers' goods
broke down, the United States threw its weight hard towards a
post-maturity alternative, that is, to increased allocations for social
welfare purposes. And the contours of the welfare state were
rounded out under Franklin Roosevelt to remain an accepted part
of the American scene, down to the present.
Phase Four: The Post-War Boom
The fourth phase-the great post-war boom of 1946-56-can be
regarded as a resumption of the boom of the 1920's. The march
to the outer suburbs continued after a marked deceleration in the
1930's. In 1948 54% of American families owned their own cars;
a decade later, 73 %. In 1946, 69 % of houses wired for electricity
had electric refrigerators; a decade later the figure was 96%; and
the figures for other electric gadgets-for example, the vacuum
cleaner and electric washer-are similar. Television was installed
in 86% of such homes by 1956.
And although the deep-freeze and air conditioning are just begin-
ning to take hold in American households it is clear that American
growth can no longer continue to be based so heavily on the exten-
sion to a higher and higher proportion of the community of the
suburban house, the automobile, and the standard mix of electric-
powered gadgets. In some items output began to fall off absolutely
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e age before the recent recession when the automobile industry, seized of
hybris in its recent models, over-reached itself and was suddenly
forced to learn that all sectoral growth curves are subject to long-run
deceleration.*
Phase Five: Where next?
What then does the future hold? Are Americans, having fashioned
this suburban, mobile civilization going to settle down to tidy it
up a little, and enjoy the benefits of affluence? Is it the four-day
work week and the three-day weekend which is coming soon? Some
think it is; and it is still too soon dogmatically to deny their judgment.
But it is clear that something new and important did happen in
American society as the age of durable consumers' goods moved
towards its logical conclusion; and this process again follows the
Buddenbrooks' dynamics. As the durable consumers' goods revolu-
tion was moving to a point where the rate of diffusion had to slow
down, American society made a most extraordinary and unexpected
decision. Americans began to behave as if they preferred the extra
baby to the extra unit of consumption.
During the war years the birth-rate rose from 18 per iooo to
about 22. This was judged at the time-and to a large degree it
certainly was-a phenomenon of resumed full employment and
early wartime marriages. In the post-war years, however, the level
of births moved up and stayed at about 25 per iooo, yielding a rise
in the population, as well as changes in the age-structure of the
population and in the rate of family formation, of major economic
significance. An official forecast of American population made in
1946 estimated that the American population would reach 165 mil-
lion in 199o; that figure was, in fact, passed within a decade. At the
moment American population is increasing at a rate of more than
1.5 % per annum, and is predicted to be some 240 million by 1980.
* This transition poses, incidentally, an interesting problem for the United States;
for it occurs at just the time when Western Europe, Japan, and-some distance behind-
Russia, are entering a rapid growth stage in durable consumers' goods. Some important
part of the American export advantage in recent times has been based on its pioneering
status in these light-engineering commodities. Now they are being mass-produced effi-
ciently in many countries, where lower wage-rates prevail. Is Detroit repeating a version
of what British manufacturers of cotton goods and rail iron went through in the more
distant past?
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The American case
This reimposition of Malthusianism in American society, in all
its consequences, combined with other circumstances-notably
the cumulative deficit in social overhead capital and the cost
of the arms race, if it should continue-are likely to make the
next decade in American history one of vigorous expansion of
output, touched at the level of private consumption by a degree of
austerity.
To make this notion of strain on private consumption more
concrete consider an estimate of the `dependency ratio' recently
calculated in a study of American population by Conrad and Irene
Taeuber.* That ratio measures the relation between the working
population and those outside the working-force age limits-in the
United States those under 20 and over 65. It is calculated in the
form of the number of dependent persons loo members of the
working force must support. Historically that ratio has been falling;
that is, each member of the working force has had to support fewer
and fewer persons outside. In 1915 it was 84; in 1935, as low as 74;
but by 1955 it had risen back to 81; and on the basis of present
population structure and birth-rates it will be of the order of 98
in 1975.
In short, by its own choice, American society as of 1959 is not
quite as affluent as it looks. It is too soon for a four-day week and
for tolerance of substantial levels of unemployment, if only the
unemployment benefits are large enough-as Professor Galbraith
has counselled. A society like the United States, structurally com-
mitted to a high-consumption way of life; committed also to main-
tain the decencies that go with adequate social overhead capital;
committed by its own interests and the interests of those dependent
upon it or allied to it to deal with a treacherous and extremely
expensive world environment; committed additionally, out of its
own internal dynamics, to a rapidly enlarging population and to
a working force which must support more old and more young...
such a society must use its resources fully, productively, and wisely.
The problem of choice and allocation-the problem of scarcity-
has not yet been lifted from it.
0 C. Taeuber and I. B. Taeubcr, The Changing Population of the United States (New
York, 1958), P. 325.
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The age of high mass-consumption
POST-MATURITY ELSEWHERE
The question now arises: why did not Western Europe, which had
also attained maturity by the First World War, join the United States
in the age of high mass-consumption in the 1920's? Or, put another
way, what has been the sequence of choices made by Western Europe
in its post-maturity phase, among the post-maturity alternatives?
Pre-1914
Before 1914, as the pressures to balance out and soften the harsh-
ness of an industrial society mounted, the societies of Western
Europe moved more sharply towards the welfare state than the
United States. This was probably because they were less agrarian in
their political balance; but there were other elements as well, notably
the greater weight of Socialist doctrines and ideals within the industrial
working force and among intellectual leaders. The government was
called upon to provide a higher proportion of total consumption than
in the United States; and as the recent comparisons between the
O.E.E.C. countries and the United States, directed by Milton Gilbert,
indicate, Western Europe has continued down to 1955 to look to the
State fora higher proportion of consumption (excluding defence) than
the United States.* The rise of urban consumption in Western
Europe was also, as in the United States, under severe restraint in
the pre-1914 decade, due to the rise in the cost of living. fi And, to a
degree, such movements as Lloyd George's Liberal Reform are to be
understood partially as a turning to politics to redress with ballots the
unfair allocations of the market-place, much as the New Deal was the
response of a society frustrated by severe and chronic unemployment.
The 1920's
What can we say about the 1920's in Western Europe?
In the immediate post-war years Western Europe faced, of course,
more severe problems of reconstruction and more difficult problems
of re-adjustment than the United States. Western Europe did not
* Milton Gilbert et al., Comparative National Products and Price Levels (O.E.E.C.,
Paris, 1958), especially Table 28, p. 82.
f See, notably, A. R. Prest, Consumers' Expenditure in the United Kingdom, 1900-
1g18 (Cambridge, 1954), PP. 5-10.
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Post-maturity elsewhere
proceed straight away into the age of durable consumers' goods as
did the United States.
Here the story of the European national economies differs a good
deal. What we can say in general is that in the 1920's there were
for most of Europe only about four years of relatively normal pros-
perity, 1925-9; and these only brought Western Europe back to
something like-or slightly above-1913 levels of output. While
American growth carried forward, lifted by the new phase of sub-
urban housing, the automobile, and consumers' durables, Europe
relatively fell behind in the 1920's. If the present analysis is correct,
the reason was that European societies, in the widest sense, failed
to move on to what is logically-in terms of the apparent income-
elasticities of demand of a free economy-the normal stage-of-growth
beyond maturity.
The i93o's
The story of the 1930's tends to confirm this hypothesis, to a de-
gree. Leaving rearmament aside, it was housing and some acceleration
in the automobile and durable consumers' sectors that helped create a
degree of Western European prosperity in the 1930's. Or, put another
way, when the policies of European governments began to create an
environment of greater prosperity in the 1930's, income-elasticities of
demand expressed themselves in a disproportionate rise in demand
for durable consumers' goods and services-including housing.
Consider, for a moment, the relative production of motor vehicles,
private and commercial, as they moved between 1929 and 1938 in
Western Europe and the United States. Svennilson calculates that the
four major European nations produced in 1929 702,000 private and
commercial vehicles, whereas the United States produced 5.4 million
in that year. After a decade of protracted depression in the United
States and a considerably greater degree of European recovery, the
figures for 1938 were quite different. For Europe i?1 million; for
the United States, 2.5 million. The gap was narrowed from a
European figure 13 % of the American in 1929 to a European figure
44% of the American on the eve of the Second World War.*
* Ingvar Svennilson, Growth and Stagnation in the European Economy (U.N., E.C.E.,
Geneva, 1954), PP. 144-52.
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The age of high mass-consumption
1900
T_
3 U.S.A.
lOGreat Britain
15 France
20 Germany
50 Italy
Diffusion of the private automobile
1910 1920 1930 1940 1950 1957
Persons per car
I ` I I I
? 1 A # A A
1900 1910 1920 1930 1940 1950 1957
Ratio scales
Figs. r, 2 and 3 suggest over a longer period the relative diffusion
of the private automobile in the post-maturity societies.
A number of technical and geographic factors bear on Europe's
relatively slower shift to the road : the vast capital needed for road-
building; the monopolistic power of the railways and the govern-
ments behind them; the earlier start of the United States in the
concept of the mass-produced car for a mass market; the greater
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Post-maturity elsewhere
distances in the United States and the greater availability of cheap
suburban land for housing development. In the end it must be
added, however, that American society, with its egalitarian bias,
its traditional high wages and high workers' living standards, took
Diffusion of the private automobile
1900 1910 1920 1930 1940 1950 1957
Persons per car
350 r I
300
p
0
0.250
b
a
00
ra. 200
GJ
150
p
0
100
N
50
10
Great Britain
France
~~_'.........._ / -1100 Italy
1900 1910 1920 1930 1940 1950 1957
more easily to the concept of high consumption on a mass basis
than did the more hierarchical societies of Europe. It has taken the
European worker a little while to accept the notion that the gadgets
of the machine age, travel, and the other services a mature economy
can afford are really for him and his family. And this fact helps,
in part, to account for the relative stagnation of the European
economy during the inter-war years.
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The age of high mass-consumption
1.0%
100 ?/
?
Canada
50/ ?
10?
1900 1910 1920 1930 1940 1950 1957
30 ?/
?
20/o
?
10 ?/
?
2 ?/
0
15%
10 ?/
o
5%
005%
I I
1900 1910
1
~ 26
Great Britain
15
Germany
Italy
Japan 06
/~ 06
U.S.S.R.
Automobiles per head in comparison with the United States
U.S.A.=100% throughout
Fig. 3
But, of course, another factor also helped determine the outcome.
The great depression after 1929 broke the hold of a generation of
political leaders in almost every mature society, whose outlook had
been dominated by a desire to re-create a kind of pre-1914 normalcy.
In the United States the depression led to an opposition coming
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to power which installed an American version of the welfare state.
In Britain it led to a National and then to a Conservative Govern-
ment that built prosperity of a sort on housing, devaluation, and
Empire Preference; in France it led to a Popular Front Government.
But in Germany and Japan, the break-down-economic, diplo-
matic, military and psychological-of the system implicit in the
Versailles settlement led to regimes which opted for a quite different
use of the potentialities of mature economies : military expansion.
And once Hitler and the Japanese militarists were in power, the
competitive arena of power imposed a quite different set of impera-
tives on all other societies. In the short run rearmament became
a factor in the European recovery of the 193o's, diverting resources
from the expansion of mass consumption; and in the not-so-long-run
there was a major war.
Post-r945
In the post-war years, an interval of reconstruction followed. But
this time Western Europe broke out into the phase of durable
consumers' goods and services. As the United States was pushing
the era of high consumption to a kind of logical conclusion, and
beginning to alter its contours by opting for larger families, Western
Europe and Japan began to diffuse to their populations, in different
degree, the kinds of goods and services which a mature industrial
system can supply. Between 1950 and 1955 the gap between
American and Western European proportionate outlays in con-
sumers' durables began to narrow; and the Gilbert study shows that
in the post-war years the differences in outlay on consumption
between the United States and Western Europe, and as among the
Western European countries, can be almost wholly explained in
terms of relative incomes and relative prices. The area to be explained
by what economists call `differences in taste' becomes remarkably
narrow.
All the post-war mature societies of the West and Japan are
behaving in a remarkably` American' manner, except the Americans,
with their curious new obsession with family life, privacy, do-it-
yourself, getting away on trailers and in motor boats, writing
impiously about the Organization Man.
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The age of high mass-consumption
The level of real income and consumption per head in Japan is,
of course, lower than in most Western European countries. Never-
theless, the remarkable post-war rise in tertiary industry, and the
evidences of a diffusion of consumers' goods and services on a new
scale, even to the peasantry, suggest that, with appropriate modifica-
tions, the Japanese are also experiencing a typical post-maturity
surge of growth based in good part on expanding levels of mass
consumption.* Western Europe and Japan have then-in their own
ways-entered whole-heartedly into the American x920's: without,
however, the peculiarly American aberration of Prohibition.
It is important to be clear that for Western Europe this shift
of leading sectors to the areas of high mass-consumption is not a
strictly post-war development. The Great West Road, the rise of
Coventry, and the Morris works at Oxford are earlier phenomena;
and the Volkswagen-as a conception-is a product of Hitler's
Germany, and of pressures for a kind of consumption to which the
German government of the late 1930's felt the need to respond,
even if only by gesture. But it is only in the post-war years that
the obstacles-technical, political, and sociological-were cleared
away. There is no doubt that the momentum of the post-war
economies of Western Europe is to be explained substantially by
a widespread boom in consumers' goods and services : the acceptance
and absorption of the age of high mass-consumption.
THE TERMS OF TRADE AFTER TWO WARS
But there is still a problem to be explained. In considering the
United States in the 1930's you will recall the emphasis on the role
of full employment as an initial force-almost a prior necessary
condition-for getting the engine of diffusion under way. The
dictum was, roughly, that for high consumption to serve as a leading
sector, one had to attain full employment, so that pressure to expand
investment in the consumption sectors would be felt.
Here one must explain how it came about that the societies of
Western Europe had such difficulty attaining full employment after the
First World War and why it was, relatively, so easy after the Second.
* See, notably, K. Ohkawa, The Growth Rate of the Japanese Economy since 1878,
PP. 231-43.
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The terms of trade after two wars
With all due respect to the Keynesian Revolution, the sea-
change in democratic politics with respect to full employment is
not a sufficient explanation; for while the politicians would have
been inexorably pressed to create conditions of full employment,
if unemployment had proved to be the major post-1945 problem-
that was not their situation down to 1956. Their dilemma has
centred on inflation and on balance-of-payments difficulties. Their
central problem has been how to mobilize sufficient resources for
other essential purposes-military and foreign policy, exports and
investment-in the face of a powerful drive to extend the area and
scale of mass consumption.
In good part the reason for the outcome lies in a radical difference
between the world after 1920 and that after 1945. In 1920 the prices
of food-stuffs and raw materials broke sharply with respect to indus-
trial products, making for extremely favourable terms of trade for
the urban areas of the world, but weakening the rural demand for
manufactured products. Thus the export markets of Europe suf-
fered.* In Britain, and to a lesser degree elsewhere, the advantages
of favourable terms of trade were largely dissipated in the inter-war
years in the form of chronic unemployment in the export sectors and
in those industries dependent upon them, such as coal. For a decade
after the Second World War the situation was exactly reversed.
The cities-and such nations as Britain-were hard-pressed by
unfavourable terms of trade; but the demand for exports was high,
full employment relatively easy to obtain. And if one adds to chronic
full employment such structural changes as the stimulus of the
Second World War to the light-engineering industries-which could
be converted efficiently to many lines of consumers' durables and
capital goods; the wartime determination of European populations
to assert themselves politically and socially; the demonstration
effect of American G. Us smoking cigars and distributing the largess
of the P.X.'s to the local girls; you have the basis for the new era in
Western European and Japanese economic, social, and political
history, which we can now observe.
* Britain, and other large exporters to food-stuff- and raw material-producing areas,
have experienced a mild version of the terms of trade dilemma in 1958-9. In the con-
temporary world, however, the pressures to maintain the incomes of importers of
manufactured goods-via capital exports--are vastly more powerful than in the 192o's.
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The age of high mass-consumption
BEYOND HIGH MASS-CONSUMPTION
Now, let us stand back a bit, and seek a wider perspective.
The argument of this book has been that, once man conceived
of his physical environment as subject to knowable consistent laws,
he began to manipulate it to his economic advantage; and once
it was demonstrated that growth was possible, the consequences of
growth and modernization, notably its military consequences, un-
hinged one traditional society after another, pushed it into the
treacherous period of preconditions, from which many, but not all
the world's societies have now emerged into self-sustained growth
through the take-off mechanism described in chapter 4.
This revolutionary state of affairs did not decree a single
pattern of evolution to which each society has conformed; but
it did, at each stage, pose a similar set of choices for each society,
framed by the problems and possibilities of the growth process
itself.
In successive chapters we have looked at the problems, possibili-
ties, and choices of the preconditions period, of the take-off, of
maturity, and of the era of high mass-consumption.
The era of high mass-consumption has by no means come to an
end, even in the United States; and it is still gathering momentum
in many parts of Western Europe and in Japan as well. We can be
sure that there will be variety in the patterns of consumption that
will emerge as compound interest grinds on and the income-elas-
ticities of demand, in their widest sense, reveal themselves in dif-
ferent societies. For example, there is no need for other societies
to invest as much as the United States in the automobile; to set
up the suburbs as far away from the centres of the cities; and to
impose on themselves the kinds of problems the United States now
faces with the reconstruction of the old city centres, the building of
new continental and metropolitan road networks, and the provision
of parking space. Indeed, there are grave geographic and physical
limitations on other nations repeating this pattern, except, perhaps,
Russia. We can be confident, however, that to the degree that
consumer sovereignty is respected and real incomes increase we will
see similar-but not identical-income-elasticities of demand and,
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Beyond high mass-consumption
therefore, similar patterns of structural evolution in different societies
as they go through the high-consumption phase.
Now, leave aside the arms race and the threat of war, and con-
sider this question: what lies beyond? What will happen to societies
when income provides such good food for virtually all that it raises
questions of public health by its very richness; where housing is of
an order that people are not tempted to exert themselves much to
improve it; where clothing is similarly adequate; where a Lambretta
or Volkswagen is within the grasp of virtually all-if not necessarily
a twin-tailed American monster? This stage has not yet been fully
attained; but it has been attained by enough of the American and
Northern European population to pose, as a serious and meaningful
problem, the nature of the next stage.
After all, the life of most human beings since the beginning of time
has been mainly taken up with gaining food, shelter and clothing for
themselves and their families. What will happen when the Budden-
brooks' dynamics moves another notch forward, and diminishing
relative marginal utility sets in, on a mass basis, for real income itself?
Will man fall into secular spiritual stagnation, finding no worthy
outlet for the expression of his energies, talents, and instinct to reach
for immortality? Will he follow the Americans and reimpose the
strenuous life by raising the birth-rate? Will the devil make work
for idle hands? Will men learn how to conduct wars with just enough
violence to be good sport-and to accelerate capital depreciation-
without blowing up the planet? Will the exploration of outer space
offer an adequately interesting and expensive outlet for resources
and ambitions? Or will man, converted en masse into a suburban
version of an eighteenth-century country gentleman, find in some
mixture of the equivalent of hunting, shooting and fishing, the life
of the mind and the spirit, and the minimum drama of carrying
forward the human race, sufficient frontiers to keep for life its
savour. (Parenthetically, we doubt that half the human race-that
is to say, women-will recognize the reality of the problem; for
the raising of children in a society where personal service is virtually
gone is a quite ample human agenda, durable consumers' goods or
no. The problem of boredom is a man's problem, at least until the
children have grown up.)
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The age of'high mass-consumption
Nevertheless this is a real enough question. Salvador de Madariaga
has recently posed the question thus, in writing of the Scandinavian
and Anglo-Saxon democracies.*
All these countries enjoy two advantages which give them a certain
prestige: the standard of living of their populations is relatively high;
and their political life is undisturbed by any serious incidents. Internal
peace and prosperity are such obvious benefits that other peoples con-
templating them might perhaps let themselves be carried away by envy
and admiration, to the extent of not observing certain counter-balancing
aspects of the lives of Anglo-Saxons and Scandinavians.
The most striking of these is without doubt boredom. Well governed
and well administered people are bored to death.
We are not prepared to accept this judgment wholly; but still
it poses the question: are poverty and civil strife a necessary condi-
tion for a lively human existence?
We shall return to this theme in the final chapter, in comparing
Marx's nirvana of Communism with our own view of the long-run
implications of compound interest. But we need not brood exces-
sively over this matter. For the moment-for this generation and
probably the next-there is a quite substantial pair of lions in the
path. First, the existence of modern weapons of mass destruction
which, if not tamed and controlled, could solve this and all other
problems of the human race, once and for all. Second, the fact
that the whole southern half of the globe plus China is caught up
actively in the stage of preconditions for take-off or in the take-off
itself. They have a reasonably long way to go; but their foreseeable
maturity raises this question : shall we see, in a little while, a new
sequence of political leaders enticed to aggression by their new-found
technical maturity; or shall we see a global reconciliation of the
human race. Between them these two problems-of the arms race
and the new aspiring nations-problems closely related in the world
of contemporary diplomacy-pose, for the technically more mature
northern societies, a most searching agenda to which, despite the
blandishments of durable consumers' goods and services and, even,
larger families, we had better turn our minds if we are to have the
chance to see whether secular spiritual stagnation-or boredom-
can be conquered.
* S. de Madariaga, Democracy versus Liberty? (London, 1958), p. 17.
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A REMARKABLE PARALLEL
Before turning, in chapters 8 and 9, to the relevance of the stages-
of-growth to issues of war and peace, it may be useful to examine
briefly a matter of both historical and contemporary interest: the
nature and meaning of the relative paths of growth of Russia and the
United States.
When we think journalistically of Russian economic development
a number of images may come to mind : an image of a nation surging,
under Communism, into a long-delayed status as an industrial power
of the first order-symbolized by the Russian success in launching
the first earth and solar satellites; an image of a pace of industrial
growth unique in modern experience, held at forced draught by
a system of state controls that constrains consumption, maintains
unexampled rates of investment, and avoids lapses from full employ-
ment; an image of a planned economy so different in its method and
institutions as to require forms of analysis different from those
applicable in the West. In short, the conventional image is of a story
apart.
There are, of course, profound special elements in the story of
the evolution of modern Russian society and of its economy; and,
before we finish, we shall try to identify the nature of its unique-
ness. But the first point to grasp is that Russian economic develop-
ment over the past century is remarkably similar to that of the
United States, with a lag of about thirty-five years in the level of
industrial output and a lag of about a half-century in per capita
output in industry. Moreover, the Russian case, linking the Czarist
and Communist experiences, falls, like the case of the United
States, well within the broad framework of the stages-of-growth
analysis.
Now, first, consider Figure 4, reproduced from the work of
G. Warren Nutter, showing industrial production per head of popu-
lation for Russia from 1880 to 1955 and for the United States from
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Russian and American growth
1870 to 1955.* Note, particularly, that Nutter's chart converts
industrial output per head into an index, with 1913 equal to Ioo.
It shows, therefore, comparative rates of growth in output per head,
not absolute figures; and it should be read with an awareness that
the median lag in 1955, for the thirty-seven industries involved,
is fifty-six years of growth : in short the whole Soviet curve is set
below the American by an amount that does not vary greatly, in
terms of time-lag.
What emerges is that, between the i88o's and the First World
War, Russia, relatively, came forward during its take-off; it fell
behind, in the 1920's, when the United States enjoyed a boom, and
Russia reorganized slowly after war and revolution; it came forward
relatively during the first Five Year Plans of the 1930's, when the
United States was gripped in a slump; and in its post-1945 phase
Russia again came forward relatively, at a time when Russian
output was more heavily concentrated in industry and American
* G. Warren Nutter, `Soviet Economic Developments: Some Observations on Soviet
Industrial Growth', The American Economic Review, May 5957. See also `Measuring
Production in the U.S.S.R.: Industrial Growth in the Soviet Union', A.E.R., May 1958.
A similar analysis of Russian and American economic growth, yielding similar conclu-
sions, is that of Oscar Honkalehto, Some Sectoral Growth Patterns in Russian Economic
Development, a thesis submitted for the degree of Master of Science, M.I.T., Cambridge,
Mass., February 1955. It is evident that Nutter's more massive statistical investigations
are wholly independent of Honkalehto's more limited pioneer effort. See also Gregory
Grossman, `Thirty Years of Soviet Industrialization', Soviet Survey, No. 26 (October-
December 1958).
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A remarkable parallel
output was shifting structurally to housing and non-manufactured
services.
Now consider the Tables, based on absolute levels of output (5)
and output per capita (6). Broadly speaking, the relative position,
in terms of years of lag, remains in 1955 surprisingly what it was
in 1913. The lags are, of course, not uniform: in output they are
under twenty years in iron ore, chemical fertilizers and dyes; well
over fifty years in certain consumers' goods: soap, for example,
woollens, and beer. But if one takes the growth sequence as the basis
for comparison, rather than other possible criteria, Nutter is correct
in his four conclusions:
Soviet industry seems still to be roughly three and a half decades behind
the United States in levels of output and about five and a half decades
in levels of per capita output.. . . Second,. . . the development of Soviet
industry is roughly equivalent to what took place (in the United States)
in the four decades bracketing the turn of the century-in per capita terms,
to an even earlier period ending around the turn of the century. Third,
over the Soviet era as a whole, Soviet industries have generally lost
historical ground to their American counterparts-the lags have generally
increased-in terms of both total and per capita output.... Fourth, while
Soviet industries have tended in recent years to gain ground in terms of
total output, they have continued to lose ground in terms of per capita
output.
All of this is, in a sense, a statistical way of stating that the Russian
take-off was under way by the 189o's, whereas the American take-off
was completed by 186o. After take-off both societies suffered severe
vicissitudes: the United States in the Civil War and the protracted
depression of the 193o's, Russia in two World Wars which brought
devastation from which the United States was spared. But the
progress of industry, after take-off, was remarkably similar in the
two cases, in terms of output; and in terms of productivity per man,
the initial American population-resource balance advantage was,
down to 1955, roughly maintained. And the similarities include
the fact that the Russian take-off was also a railway take-off, bringing
to life new modern coal, iron, and heavy-engineering industries;
and these railway take-offs were also each followed by a stage
dominated by the spread of technology to steel fabrication, chemicals
and electricity.
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Lag of the Soviet Union behind the United States in output,
bench mark dates, 37 industries
Lag
(number of years)
Increase (+) or
decrease (-) in lag
1913
1937
1955
1913-371937-551913-55
Iron ore
28
36
15
8 -21 -13
Pig-iron
30
36
39
6 3 9
Steel ingots
21
32
29
11 - 3 8
Rolled steel
27
35
29
8 - 6 2
Primary blister copper
33
50
51
17 1 18
Lead
94
6o
52
- 34 - 8 - 42
Zinc
46
43
46
- 3 3 0
Electric power
13
21
16
8 - 5 3
Coal
45
49
47
4 - 2 2
Coke
31
36
30
5 - 6 - i
Crude petroleum
14
26
34
12 8 20
Natural gas
32
51
52
19 1 20
Soda ash
22
31
24
9 -7 2
Mineral fertilizer
43+
27
14
-16+ -13 -29+
Synthetic dyes
2
15
12
13 -3 10
Caustic soda
17
25
24
8 - 1 7
Paper
44
46
54
2 8 so
Sawn wood
61
73
62
12 -11 1
Cement
19
33
32
14 - 1 13
Window glass
13
0
r
-13 - -13+
Rails
42
57
54
15 - 3 12
Railroad passenger cars
21
46
53
25 7 32
Railroad freight cars
33
51
69
18 18 36
Butter
21
38
35
17 -3 14
Vegetable oils
5
26
29
21 3 24
Sausages
24+
36
38
- 2 -
Fish catch
-11
4
10
15 -4+ -
Soap
34+
52
52
- 0 -
Sugar
6
17
27
11 10 21
Canned food
43+
45
45
- 0 -
Beer
42
66
73
24 7 31
Cigarettes
- I
11
14
12 3 15
Boots and shoes
23+
44
44
- 0 -
Rubber footwear
14+
19
r
- - 19+ - 14+
Cotton fabrics
28
44
48
16 4 20
Silk and synthetic fabrics
23
44
25
21 -19 2
Woollen and worsted fabrics
43+
67+
69
- - -
Median
28
36
35
11 -1 9
Note: A Soviet lead is indicated by a negative sign in the first three columns. Where
U.S. data do not go back far enough to give the full lag, the calculable lag is followed
by a plus sign. Dash (-) indicates insufficient data. Asterisk (*) indicates Soviet
output exceeds U.S. output up to present.
96
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TABLE 6. Lag of the Soviet Union behind the United States in
per capita output, bench mark dates, 37 industries
Lag
(number of years)
?
Increase or decrease (- )
in lag
A
r
~
1913
1937
1955
1913-37 1937-55 1913-55
Iron ore
53+
52
54
- 2 -
Pig-iron
4 4
Steel ingots
30
40
49
10 9 19
Rolled steel
24+
48+
52
Primary blister copper
53
58
66
5 8 13
Lead
Io5+
log
76
-33 -29+
Zinc
53
57
59
4 2 6
Electric power
14
26
25
12 -I II
Coal
66
69
69
Coke
33+
49
56
Crude petroleum
27
34
41
7 7 14
Natural gas
32+
52
70
- 18 -
Soda ash
27
43
45
16 2 18
Mineral fertilizer
43 +
40
30
-3+ -10 -13+
Synthetic dyes
14+
20
22
- 2 -
Caustic soda
19
40
35
21 -5 16
Paper
54+
67
71
- 4 -
Sawn wood
114+
102
III
-12+ 9 -3+
Cement
30
38
47
8 9 17
Window glass
34 +
-2
15
-36+ 17 -19+
Rails
46+
70
85
- 15 -
Railroad passenger cars
27
57
69
30 12 42
Railroad freight cars
33+
57+
75+
Butter
30
50
58
20 8 28
Vegetable oils
16
40
44
24 4 28
Sausages
24+
48+
61
Fish catch
33+
57+
19
-38+ -14+
Soap
34+
58+
76+
Sugar
12
32
47
20 15
Canned food
43 +
62
6o
Beer
43 +
67+
85+
Cigarettes
0
15
19
4 19
Boots and shoes
23 +
47+
65+
Rubber footwear
14+
38+
56+
Cotton fabrics
43 +
67+
85+
Silk and synthetic fabrics
34
58
42
24 -16 8
Woollen and worsted fabrics
43 +
67+
85+
Median
-
56
Io 4 13
Note: See Table 5.
From: G. Warren Nutter
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Russian and American growth
THE MAJOR DIFFERENCES
Having established this rough but important framework of unifor-
mity of experience now let us catalogue some of the major differences
between Russia and the United States.
First, the creation of the preconditions for take-off was, in its
non-economic dimensions, a quite different process in Russia.
Russia was deeply enmeshed in its own version of a traditional
society, with well-installed institutions of Church and State as well
as intractable problems of land tenure, an illiterate serfdom, over-
population on the land, the lack of a free-wheeling commercial
middle class, a culture which initially placed a low premium on
modern productive economic activity. The United States, again to
use Hartz' phrase, was `born free'-with vigorous, independent
land-owning farmers, and an ample supply of enterprising men of
commerce, as well as a social and political system that took easily to
industrialization, outside the South. Thus, whereas Russia had to
overcome a traditional society, the United States had only to over-
come the high attractions of continuing to be a supplier of food-stuffs
and raw materials-as well, if you like, as the damper of a milder
colonialism.
Second, throughout this sequence, American consumption per
head, at each stage of growth, was higher than in Russia. We have,
as in other cases, a high degree of uniformity in the timing of the
spread of technology, taking place within a considerable spread in
income and consumption per capita. Basically, this is a matter of
population-resource balances; but the tendency was reinforced in
both Czarist and Soviet Russia by constraints imposed by the State
on the level of mass consumption.
Third, the drive to maturity took place in the United States,
after the Civil War, in a setting of relative political freedom-outside
the South-in a society tightly linked to the international economy,
at a time of peace, and, generally, with rising standards of consump-
tion per head. In Russia it occurred in the three decades after 1928,
in a virtually closed economy, against a background of war and
preparations for war, which did not slow the spread of technology,
but which did limit the rise of consumption; and it occurred with
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The major differences
something over io million members of the working force regularly
in forced labour down to very recent years.
Fourth, the Soviet drive to maturity took place not only with
constraints on consumption in general but severe restraints in two
major sectors of the economy, not fully represented in these indus-
trial production indexes: agriculture and housing. In housing the
Soviet Union lived substantially off the Czarist capital stock down
to recent years, minimizing housing outlays, letting space per family
shrink; in agriculture it invested heavily, but within a framework of
collectivization that kept productivity pathologically low, once
Lenin's `New Economic Policy' was abandoned in 1929. In addition,
Russia has invested very little indeed in a modern road-system,
which has drawn so much American capital.
Thus, the equality in historical pace between Soviet and American
industrialization has been achieved by a radically higher proportion
of Soviet investment in the heavy and metal-working industries
than in the United States, imparting a major statistical advantage
to Russia in comparison of indexes of industrial growth. And this
difference in the pattern of investment was reinforced by the fol-
lowing two further quite real technical factors enjoyed by any
late-comer: the ratio of net to gross investment during the indus-
trialization drive was higher in Russia than in the United States; and
the pool of unapplied technological possibilities was greater than in
the United States.* Both of these latter advantages are, essentially,
transient; that is, as Russia has come to maturity, it must allocate
increased relative proportions of its resources to meet depreciation;
and, as it catches up with modern technology over the full range of
its resources, it can enjoy, like the United States and the other mature
economies, only the annual increment to technology, as it were,
rather than a large unapplied back-log.
But one apparent advantage remains to the Soviet Union in the
statistics of the growth race, and this we had better examine a little
further; that is, the concentration of its investment in heavy industry
related to military potential, as opposed to the American diffusion
of investment over heavy and light industry, consumers' goods and
* See, especially, Norman M. Kaplan, `Capital Formation and Allocation', in
A. Bergson (ed.), Soviet Economic Growth (Evanston and N.Y., 1953).
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Russian and American growth
services. It is essentially this difference in the pattern of the outlays
above the level of consumption which defines technically the major
differences between the Soviet and American economies and which
poses, in a sense, the question of whether future Soviet economic
growth is a danger to the Western world.
To approach this question rationally it is necessary to separate
sharply two questions: the question of military outlays; and the
question of the Soviet rate and pattern of economic growth.
THE MILITARY QUESTION
First the military question. In recent years the Soviet Union has
been allocating about 20 % of GNP to military purposes. The most
recent Soviet budget figures suggest some decline in the proportion,
but not in the absolute level of allocation to military purposes.
The United States has been allocating about io % of GNP to mili-
tary purposes. Correcting for relative levels of GNP and relative
prices it is probably true that in real terms the total Soviet military
effort is about equivalent to the American. It is, however, quite
different in composition. Russia has plunged somewhat ahead in
medium- and long-range ballistic missiles and is in a stage of produc-
tion rather than research and development which uses up, almost
certainly, a higher proportion of its budget; and Russia has main-
tained a large army. The United States has, on the other hand,
larger naval and air-force allocations.
The nature of the Soviet military threat lies, then, not in the
scale of its military outlays relative to the United States but in
whether its particular military dispositions are likely to yield one
of the two following situations: first, a lead in missiles sufficiently
great to take out Western retaliatory power at a blow. If this result
were to be achieved, it would derive not from the scale of the Soviet
effort, but from a forehanded superior concentration of its best
scientific talents on a new weapons system: just as the Battle of
France was lost in 1940 not because of the scale of the German
effort relative to that of France and Britain but because the blitz-
krieg technique was built on mobile tank warfare backed by the
dive-bomber. The second danger is that Russia will find a situation
where it can effectively counter the American air and naval strength
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The military question
with its missile threat and bring to bear its superior ground forces
in a successful limited war in some important area.
There is also a third danger, of a mixed military and diplomatic
character; namely, that in a test of will Moscow will succeed in
forcing a Western diplomatic retreat, in a specific area, due to fear
that holding fast will risk major war.
It happens to be the author's view that American military efforts
should be larger than they now are; but the danger lies not in the
relative scale of Soviet versus American and Western military out-
lays; nor does it lie in some generalized Soviet superiority in growth-
rate of GNP; the danger lies in the composition of the Soviet
military effort relative to that of its potential opponents, and in the
ways the Soviet leadership might contrive to bring it to bear.
This general point can be made more concrete by an illustration.
After the first Soviet sputnik was launched there was some quite
widespread soul-searching in the United States on whether that
country was producing too few engineers and scientists. In some
quarters the argument assumed the form of a kind of numbers racket
in which charts were drawn up of the output of engineers in both
countries, with the curves ominously crossing. This approach missed
the point. The point is that Russia has concentrated a much higher
proportion of its existing engineers and, especially, its first-class break-
through scientists in military affairs; and it concentrated them to a
much higher degree on the missiles problem. It is in allocation rather
than in number that Russia has moved forward-in missiles, and in
military power generally.* It has created first-class military status
from an economic base which, in scale and productivity, is some
distance behind that of the United States, grossly behind that of the
United States and Western Europe combined. In this sense, it has
repeated what Germany and Japan did in the 1930's. We would not,
for one moment, deprecate the meaning or the threat of this Russian
performance. But this selective and purposeful performance should
not be confused with the question of growth-rates and their meaning.
* This argument would not, of course, imply that the size of the total pool of scientists
and engineers is irrelevant to a society's military capabilities. For example, Russia and
the United States with their `large battalions' can explore simultaneously a number of
possible solutions to bottleneck problems; whereas Britain and France, for example,
must gamble on a prima facie choice among possible solutions.
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Russian and American growth
THE ECONOMIC QUESTION
That leaves us with the second question: the danger-or, better,
the meaning-of the current higher rate of increase in Soviet GNP.
Are we to quaver because in Russia GNP moves forward now at
something just under 6%; whereas it has averaged only 3 or 4% in
the post-1945 United States? Although, of course, the Western
world would lose power and influence in many directions if its
output should continue to stagnate, there is no cause for panic in
the light of aggregative Soviet statistics. Why not? Will not the
curves soon cross? Will not Russia soon achieve world economic
primacy in some meaningful sense?
First, it is necessary to beware of linear projections. A variety of
forces at work in Russia, already evident in her projected figures
for expansion, are making for deceleration. The E.C.E. Survey of
Europe in 1957 (published in 1958) presented, for example, the
official projected rates of growth in key sectors of Russian industry
shown in Table 7.*
TABLE 7. Rates of growth in Russian industry (%)
Annual average Electric
rate of increase Coal Oil Pig-iron Steel power Cement
1955-6o 8.6 13'6 10.0 8.5 13'5 19'5
1957-72 2.8 94 5'3 5'3 4'7 8.6
There is little doubt, for example, that the absolute figures of
Soviet steel output will approach the level of those in the United
States. As Nutter has said: `each son will ultimately catch up to his
father in height, and brothers of different age will differ less and less
in height as they get older'. But retardation in growth-rate is already
under way in many Soviet sectors; and while the absolute figures of
the two nations will get closer, and, in time, the historic productivity
lags should also diminish ... what of it? Why should Russia not have
an industrial establishment equal to or even greater than the United
States, if its population and population-resource balances permit?
* These longer-term figures are not markedly inconsistent with the 1965 goals
presented by Khrushchevto the 21stCongress of the SovietCommunist Party in January
1959.
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Second, if the West copes with the military and foreign policy
menace represented by the ambitions and dilemmas of Russia-
along some such lines as are suggested in chapter 9-then the
composition of Russian output is of little concern to us.
Moreover, the composition of Russian output must certainly
change. The present higher Soviet rate of increase in GNP is the
product substantially of a peculiar concentration of investment in
certain sectors. If steel is not to be used for military purposes, what
will it be used for? An enormous heavy industry, growing at high
rates, is not a goal in itself; nor is it an intrinsic international advan-
tage. This is gradually being reflected in Soviet allocations: in
agriculture, for example, where the pressure to increase the supply
of higher grade food is a major domestic goal; to a degree in housing;
to a degree in other forms of consumers' goods-for example,
television. Slowly, ever so slowly, the creep of washing machines, re-
frigerators, motor-cycles, bicycles, and even automobiles has begun-
and the first Russian satellite town is under construction.' As these
pressures grow, and the structure of the Soviet economy moves
closer to that of the high-consumption economies of the West, we
can expect the growth-rates to become more alike, as well. But the
fundamental point is this: we should not be taken in by the fallacy
of misplaced concreteness. An economy is an instrument for a larger
purpose. When that economy is turned to purposes which endanger
us-as in the Soviet pattern and scale of military outlays-we must
respond by making aggression steadily unattractive. Otherwise, the
test of our own economies-and of the non-Communist world as
a whole-lies not in the Soviet economic performance, but in our
ability to fulfil the ambitions of our own peoples.
THE LOCUS OF THE CHALLENGE
Here is the rub and the challenge. Commenting on Nutter's exposi-
tion late in 1957 Hans Heymann, Jr, said : ` ... the reduction in
Soviet growth that is likely to have occurred would hardly appear
to be a cause of jubilation on our part, particularly when viewed
against the background of the trend in U.S. manufacturing output,
* See, notably, Economic Survey of Europe in 1957 (E.C.E., Geneva, 1958), chapter i,
pp. 14 and 22.
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Russian and American growth
which has grown not at all over the last two years.'* If American
and Western output stagnates, we shall not be able to mount
adequate programmes of military defence or of assistance to under-
developed areas; and we shall not be able to meet the pressures for
increased private consumption and social overhead capital arising
from our enlarging populations. It is evident, for example, that
democratic societies must learn to solve the problem of inflation by
means other than constraint on the level of employment and output.
While the American and Western European rates of growth, in
themselves, are not the key question, it is only against the back-
ground of adequate rates of increase in both output and productivity
that the democratic process is likely to yield a composition of
output which will both protect our societies and maintain their inner
quality.
The lesson of all this is, then, that there is nothing mysterious
about the evolution of modern Russia. It is a great nation, well
endowed by nature and history to create a modern economy and
a modern society. In the course of its take-off it was struck by
a major war, in which the precarious and changing balance between
traditional and democratic political elements collapsed in the face
of defeat and disorder; and a particular form of modern societal
organization took over control of a revolutionary situation it did
not create. Its domestic imperatives and external ambitions have
produced a version of the common growth experience, abnormally
centred in heavy industry and military potential. Its political
leadership is now trying to exploit the margins of resources opened
up by arrival at maturity to seek a radical expansion of Soviet power
on the world scene, by damping the rate of expansion of consump-
tion. But neither in scale, nor in allocation, nor in momentum
do Russian dispositions present a menace beyond American and
Western resources to deal with; nor, peering farther ahead, are
there reasons to believe the Russian experience will transcend
familiar limits.
The problem posed by contemporary Russia lies not in the unique-
ness of its story of modernization, but in whether the United States
and the West can mobilize their ample resources to do the jobs that
* American Economic Review, Papers and Proceedings, May 1958, P? 424.
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The locus of the challenge
must be done-resources of spirit, intellect, will and insight quite
as much as steel and electronic gadgets; and jobs which extend
not only to missile arsenals and the further diffusion of welfare
at home, but to the Indian second and third Five Year Plans
and the far reaches of Asia, the Middle East, Africa, and Latin
America.
The problem lies not in the mysterious East, but in the in-
scrutable West.
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RELATIVE STAGES-OF-GROWTH
AND AGGRESSION*
WAR IN MODERN HISTORY
In this chapter we turn to the problem of war. Indeed, it cannot
be evaded in a system of thought designed to make some kind of
order of the transition from traditional to modern societies. For
the progression we have considered thus far-from traditional
societies to societies of high mass-consumption-has, as a matter
of simple historical fact, been shot through with violence organized
on a national basis. Men and the societies they have constructed
have not climbed smoothly up the stages-of-growth, once the world
of modern science was understood and began to be applied. They
did not create, unfold and diffuse the layers of technology and let
consumers' sovereignty and its income- and price-elasticities of
demand determine the contours of growth. War has drawn resources,
shattered or altered societies, and changed the options open to men
and to the societies of which they were a part.
Quite aside from the brute historical fact of armed conflict there
are three quite particular reasons why this book must deal with
the problem of war.
First, the theory of the preconditions period-of the undoing of
the traditional society and its supplanting with one form or another
of modern society-hinges substantially on the demonstration effect
of the relation between modernization and military power.
Second, if this system is to challenge and supplant Marxism as a
way of looking at modern history it must answer, in its own way, the
question posed under the rubric of `imperialism' by the Marxist
analysis, as elaborated by Marx's successors.
And finally, if this system is to provide a useful partial perspective
on the times in which we live, it must throw some light on the nature
* For an interesting and fresh analysis of the causes of war, different from this in
structure but similar in spirit, see Raymond Aron, War and Industrial Society, London,
Oxford University Press, 1958.
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War in modern history
of our dangers, in a time of precarious nuclear stalemate; and it
should help in some small way to suggest how the lions which stand
in our path-that is, the arms race and the organization of a world
containing many new mature nations-can be removed or safely
by-passed.
THE PROBLEM OF NATIONAL SOVEREIGNTY
We start with a fact given from outside this analysis. The fact is
that the whole transition we are examining took place historically
within a system of nation states and of national sovereignty. National
sovereignty means that nations retain the ultimate right-a right
sanctioned by law, custom, and what decent men judge to be legiti-
macy-the right to kill people of other nations in defence or pursuit
of what they judge to be their national interest. The concepts of
nationhood, of national sovereignty, and of the legitimacy of war
as a reserved instrument of national policy are inherited, then, from
the world of traditional societies; they antedate the sequence of
post-traditional stages we are examining in this book. They are not
to be explained by the processes set in motion by the transformation
of traditional to modern societies; nor are they to be explained by
special features or compulsions of any particular stage-of-growth.
Nevertheless, the wars fought by nations since the process of
modernization got under way have certain distinctive characteristics.
And while the fact of war is not to be explained with reference to
the stages-of-growth, the character of wars can be usefully related
to these stages.
THREE KINDS OF WARS
Specifically, it is possible to distinguish rather sharply three kinds
of wars which have been fought in, say, the past three centuries,
since Western Europe began to develop endogenously the pre-
conditions for take-off.
First, colonial wars. Here we bring together the conflicts arising
from the initial intrusion of a colonial power on a traditional society;
from the effort to transfer power from one colonial power to another;
and conflicts arising from the effort of colonial peoples to assert
their independence of the metropolitan power.
A second kind of war can be defined as regional aggression. This
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type of limited war arose from the dilemmas and the exuberance of
newly formed national states, as they looked backward to past humilia-
tion and forward to new opportunity, while confronting the choices
open to them in the early stages of modernization.
Finally, there have been the massive wars of this century centred
on the struggles to achieve-or to prevent others from achieving-
a definitive grasp on the Eurasian balance of power: a grasp that
was tantamount, in the first half of the twentieth century, to world
power.
We shall now consider separately each of these types of military
conflict as they relate to the stages-of-growth. Again, it should be
borne in mind that what we have to say cannot be a full explanation
of war; for the hypothesis is that war, ultimately, arises from the
existence and acceptance of the concept of national sovereignty;
and the nature and origins of nationalism lie outside this way of
looking at things. We shall consider merely how certain types of
wars can be related to the relative stages-of-growth among sovereign
nations, as they pursued what they conceived to be their interests in
the highly competitive, but also highly oligopolistic circumstances
in which they have found themselves.
COLONIALISM
We turn first, then, to conflicts arising from colonialism. Colonial-
ism arose, in part, of course, because from the fifteenth century
on, a world arena of power existed in which the European nation
states competed in various overseas areas for trade; for bases of
military advantage; and for what was then military potential: that
is, for bullion, naval stores, and the like. As Charles Wilson points
out, in his essay on Mercantilism, Josiah Child counselled that
`Profit and Power ought', in such circumstances, `jointly to be
considered'.
The element of power, however, was initially often remote and
derivative so far as the day-to-day business of the then major powers
was concerned. The proximate goal-for example, in the famous
Anglo-Dutch competition of the seventeenth century-was trade;
and, especially, it was that form of trade which was highly regarded
by the major nations of the seventeenth and eighteenth centuries:
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that is, trade which permitted the import of bullion and raw materials
and a favourable balance of exports-if possible, the export of manu-
factures. The favourable trade balances such commerce was designed
to foster did relate, in contemporary thought, to relative national
power; but the operating goal was trade.
Why, then, was not trade conducted without the creation of
colonies? The answer to this fundamental question has two elements
that need to be sharply distinguished; although they tend to get
intermixed in the flow of history.
First, the struggle for trade took place in a framework where
the major powers were postured, by the nature of history, as
competitors. It is no accident that the major wars of the eighteenth
century were wars of succession. The nations were caught up, by
historical inheritance, so to speak, in an inherently competitive
system of power-not, in the first instance, economic power, but
military and political power. And in part the wars in the colonies
derived from those larger competitive compulsions: the compulsion
not merely to advance a national interest positively, but to advance
a national interest negatively by denying a source of power to another
nation. The creation of a trade monopoly in a colonial area was one
way to do this, once the new areas were discovered or old areas
rediscovered.
But there was a second reason, as well, for the application of
military power in the colonies; and this second reason relates not
to the power structure of Europe, but to the societal condition of the
colonial areas themselves. Colonies were often established initially
not to execute a major objective of national policy, nor even to
exclude a rival economic power, but to fill a vacuum; that is, to
organize a traditional society incapable of self-organization (or un-
willing to organize itself) for modern import and export activity,
including production for export. Normal trade between equals
would often have fulfilled the initial motivation of the intruding
power, and a large part of its continuing motivation; for the tradi-
tional society had nothing but raw materials to export. And normal
trade would have been in many cases tidier, more rational, and
even, less costly. In the four centuries preceding igoo, however,
the native societies of America, Asia, Africa, and the Middle East
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were, at various stages, structured and motivated neither to do
business with Western Europe nor to protect themselves against
Western European arms; and so they were taken over and organized.
Colonies were founded, then, not mainly as a purposeful goal of
national policy in pursuit of power, but for two more oblique
reasons. First, as a reflex of the power struggle built into the Euro-
pean arena. Second, colonies were founded because of the following
sequence: because some economic group wanted to expand its
purchases or sales; it encountered difficulty in arranging the condi-
tions for efficient business; it encountered also gross military weak-
ness; and it persuaded a government which looked kindly on its
efforts to take responsibility for organizing a suitable political frame-
work to ensure, at little cost, the benefits of expanded trade.
Once colonial responsibility was accepted by the nation con-
cerned, however, the whole affair was transformed. It moved from
the essentially peaceful terrain of business to the area of national
prestige and power where more primitive and general national
interests and motives held sway.
Two specific consequences flowed from this transfer from the
world of book-keeping to that of the flag. First, certain non-colonial
powers came, as a matter of prestige and style, to desire colonial
possessions as a symbol of their coming of age. For example, nothing
in the capital markets of the Atlantic world or in their trading
patterns justified much ado about colonies, on strictly economic
grounds, from, say, 1873 to 1914.* A little more could be said for
certain colonial positions on military or strategic grounds in the
nineteenth century. But the competition for colonies was conducted
for reasons that were unilaterally rational on neither economic nor
military grounds : the competition occurred essentially because com-
* There was, incidentally, a somewhat more rational economic case for colonies in
the seventeenth and eighteenth centuries, before the industrial revolution took hold in
Europe, than in the late nineteenth century. Before the industrial revolution the total
supply of food-stuffs and raw materials (or the total supply of colonies) could be regarded,
in a sense, as fixed and finite; that is, what one nation had was intrinsically a denial to
others. Once the flow of modern technology was under way, under nineteenth-century
conditions, where supplies could be drawn in trade with sovereign nations (for example,
the United States), the possibility existed of using applied technology to substitute
for imports (for example, chemical fertilizers), or to generate exports which would permit
their economical acquisition from accessible foreign markets.
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petitive nationalism was the rule of the world arena and colonies
were an accepted symbol of status and power within that arena.
As the United States discovered, for example, when it found
itself to its surprise and discomfiture owning the Philippines after
the Spanish-American War, there was no way of relinquishing a
colony which had not modernized its society, without turning it over
to another colonial power. The colonial game had thus become a
reflex not of economic imperatives, but of inherently competitive
sovereignties. This kind of mixture of profit and power-which
Josiah Child probably had in mind-holds for the pre-1914 imperial-
ist competition, as well as for that of the seventeenth and eighteenth
centuries.
But there was a second kind of mix-up of profit and power which
Child may not have perceived, because it was only to become fully
apparent in later times. The second consequence of shifting colonies
from a limited economic to major symbolic status, in an oligopolistic
arena of power, was that withdrawal from a colony became a matter
of national prestige, and thus extremely difficult. Almost without
exception colonial positions were acquired at relatively little cost, at
the behest of limited interests which might not have commanded
national support if much blood and treasure had been initially
required for the enterprise. Even when wars were fought to transfer
the control of sovereignty over colonies they were generally limited
wars. But the exit from imperial status, with a few exceptions, took
the form of bitter, bloody war, or it was accompanied by major
political and diplomatic crises at home. The experience of colonial
administration created not merely ties of economic advantage but
human memories of cumulative effort, and achievement and status-
as well as of national power and prestige-extraordinarily difficult
to sever : as Britain, France, and the Netherlands have all found
since 1945?
So far as colonial wars are concerned, then, the stages-of-growth
offer only a partial and limited insight. On the one hand they were
partially a reflex of competitive nationalism which led nations to take
the plunge into colonies as part of dynastic or other power competi-
tion; and this link of colonialism to non-economic dimensions of
nationalism helps explain the psychological pain of withdrawal.
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In part, however, it was of the nature of the initial relation between
a traditional and a more advanced society that the doing of efficient
business required a type of administration the traditional society
could not supply. But once the commitment to administer was
made, a host of non-economic motives became mixed up in the
affair which, again, made withdrawal difficult.
The ability of the colonial peoples to force withdrawal is, however,
more directly related to the stages-of-growth. As pointed out in
chapter 3, although imperial powers usually set up administrations
and pursued policies which did not optimize the creation of the
preconditions for take-off, they could not avoid bringing about
transformations in thought, knowledge, and institutions-as well
as in trade and in the supply of social overhead capital-which
moved the colonial society along the path towards take-off; and the
colonial powers often included modernization of a sort as one object
of colonial policy. By positive and negative demonstration effects
a version of the preconditions period was thus set in motion. Above
all a concept of nationalism, transcending the old ties to clan or
region, inevitably crystallized around an accumulating resentment
of colonial rule.
In the end, out of these semi-modernized settings, local coalitions
emerged which generated political and, in some cases, military
pressure capable of forcing withdrawal. The wars of independence
which dot colonial history, from 1776 in America to 1959 in Algeria,
are thus, to a degree, related to the stages-of-growth. Specifically,
they are related to the dynamics of the preconditions period.
REGIONAL AGGRESSION
And it is directly from the dynamics of the preconditions period that
a second type of war has arisen: regional aggression. For the coali-
tions and policies appropriate for achieving independence rarely
suit the subsequent needs for completing the preconditions and
launching the take-off. It is out of the dilemmas and opportunities
of men, risen to power on the banners of independence, trained as
politicians or soldiers, but now facing responsibility for a turbulent
transitional society, that this second kind of war has tended to
occur.
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Regional aggression
Recall again, one of the central themes of chapter 3. It is argued
there that a reactive nationalism was likely to be an initial unifying
element, making for a purposeful effort to supplant the traditional
society, binding up quite disparate elements into an ad hoc coalition.
Once the new coalition had attained power against the older tradi-
tional groups, the colonial power, or both, it faced a choice among
three lines of policy; or, more accurately, a problem of striking
a balance among them. Specifically, the new leaders faced this
question: should nationalism be turned to assert power and dignity
on the world scene; should an effort be made to consolidate the
power of the central government over the residual traditional forces
in the regions; or should economic and social modernization be
the primary objective? From late eighteenth-century America to
the contemporary scene in Asia, the Middle East, and Africa the
universality of this problem of choice and balance among the three
possible directions of nationalist endeavour can be established.
Historically, it has proved extremely tempting for a part of the
new nationalism to be diverted on to external objectives, notably
if these objectives looked to be accessible at little real cost or risk.
These early aggressive exercises were generally limited in objective,
aimed at territories close to the new nation's own borders-within
its region-rather than directly at the balance of Eurasian power:
thus, the American effort to steal Canada during the French wars;
Bismarck's neat military operations against Denmark, Austria, and
France from 1864 to 1871; the Japanese acquisition of primacy in
Korea in 1895; and the Russian drive through Manchuria to Vladi-
vostok, leading to the test of strength with resurgent Japan in
1904-5. And, from this perspective, the wars of the French Revolu-
tion became the greatest of all examples of regional aggression,
arising from an unresolved transitional process, during the pre-
conditions period.
These adventures in regional aggression often have substantial
political support, in part because an ebullient nationalism is wide-
spread, irrespective of economic or social interests; in part because
special interests believe they will directly benefit from the new
territorial acquisitions. But, above all, such regional aggression,
based on a `bloody shirt' politics which recalls past humiliation,
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can help maintain cohesion in a society where the concrete tasks of
modernization raise difficult and schismatic domestic issues, which
the leader of the coalition would seek to evade if possible. The
gropings for a unifying national policy of, say, Nasser and Sukarno
in the period 1955-8, represent a version of an old problem and a
familiar response. The battle-cries centred on West Irian, Kashmir,
Israel, and the tendency of bedevilled politicians in transitional
societies to cling to the anti-colonial banner should be no surprise.
And we should be in reasonably good heart about this phase. For
these early, limited external adventures, associated with late pre-
conditions or early take-off periods, appear generally to have given
way to a phase of absorption in the adventure of modernizing
the economy and the society as a whole. Post-civil-war America,
post-1873 Germany, post-1905 Japan, even post-192o Russia were,
for several decades at least, so absorbed at home with the extension
of modern technique that they did not assert themselves dangerously
on the world scene. Historically the next dangerous age comes with
the approach of economic maturity, when one of the options open
is to concentrate the resources of the mature economy on a more
ambitious expansion of external power.
STRUGGLES FOR THE EURASIAN POWER BALANCE
The differential timing of the approach to economic maturity helps,
specifically, to illuminate the three great military struggles of the
twentieth century: the First World War, the Second World War,
and the Cold War, at which we shall draw an arbitrary line in
June 1951, with the beginning of the Korean truce negotiations.
But to understand the problem of power and major conflict in the
first half of the twentieth century we must, first, look backward and
ask why there were no major international wars in the century after
Napoleon's defeat.
Britain emerged a victor from the Napoleonic Wars in part because
its take-off into industrialization, based largely on cotton textiles,
helped (along with the monopoly in West Indian trade) to provide
the foreign exchange to. sustain its alliances and to minimize
Napoleon's continental blockade. In any case, Britain's economic
status at the time of Napoleon's defeat was unique, when viewed
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from the perspective of stages-of-growth; and its military strength-
centred in the navy-was unchallengeable in the arena of power
as it then existed.
Why did the settlement of 1815 produce this relatively happy
result? The settlement of 1815 worked because, at one end of
Eurasia, neither Germany nor Russia felt able (or was permitted) to
acquire the territories held within the Austro-Hungarian Empire;
and because, at the other end of Eurasia, Japan and China, as well
as the bulk of Africa, the Middle East, and South-East Asia, were
essentially out of the power game.
The world that Britain held in balance thus consisted mainly of
Western and Central Europe and the maritime fringes of Asia,
the Middle East, and Africa. Russia, it is true, lurched from one
side of its Eurasian cage to the other, first to the west, then to the
east; but, in the nineteenth century, it could be held within that
cage with reasonable economy of amphibious force, as the Crimean
and Russo-Japanese Wars indicated. And the Western Hemisphere
emerged as a special sphere, closely related to-but still separated
from-the major power game by the Monroe Doctrine and the
complex implicit understanding with Britain which gave it vitality.
In the three decades after the Civil War, the four great areas-
Germany, Japan, Russia, and the United States-whose coming
to maturity was to determine the world's balance of power in
the first half of the twentieth century-were at stages which did
not lead to major aggression. The world balance of power which
emerged after 1815 was being rapidly undermined; but this fact
could largely be concealed, except from those professionally con-
cerned with the problem of force and potential force. After the
Franco-Prussian War, Germany settled down under Bismarck to
consolidate its political position and to move from a remarkable
take-off into economic maturity; Japan, after the Meiji restoration,
took about a decade to consolidate the preconditions for take-off,
and, less dramatically than Germany, moved into the first stages of
sustained economic growth. Russia also slowly completed its pre-
conditions and moved, from the 189o's, forward into a take-off
bearing a family resemblance to that of the United States a half-
century earlier.
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The twentieth-century arena, clearly beginning to form up in the
latter decades of the nineteenth century, assumed, then, this form;
stretching east from Britain were new major industrial powers in
Germany, Russia, and Japan, with Germany achieving maturity by
about igto-the most advanced among them. In the face of this
phenomenon, Britain and France were moving uncertainly into
coalition, with Britain beginning to look West for further support.
And, poised uncertainly on the rim of the world arena, groping to
define a stance consistent with both its isolationist tradition and
its new sense of world status, was the United States, like Germany
also moving into technical maturity.
But the sweep of industrialization across northern Eurasia was
not uniform. Eastern Europe and China did not move into take-off
in the early decades of the twentieth century. They were still caught
up in the early, turbulent, transitional phases of the preconditions;
and they were to provide peculiar difficulty.
Why should this have been so? Why were Eastern Europe and
China the cause of so much trouble? Each of these two regions, if
attached to any major power, had the geographic location, the
population, and the long-run potential capable of shifting radically
the Eurasian power balance; but lagging their neighbours as they
did in the growth sequence, they lacked the political coherence and
economic strength to assert that potential independently or to avoid,
throughout the first half of the twentieth century, a high degree
of dependence.
It was this differential alteration in the power balance, traceable
to differences in the timing of the stages of economic growth, that
was to provide a terrible temptation to Germany in Eastern Europe
and to Japan in China; it was to serve alternately as a source of fear
and temptation to Russia, in both regions; and it was to offer chronic
danger to France, Britain and the United States, whose strategic
status was radically and permanently altered by both consequences
of the spread of industrialization-that is, both by the creation of
a single, interacting arena of power across the northern half of the
globe and by the emergence of soft spots within it which made the
pursuit of Eurasian hegemony appear possible and attractive, at
various stages, to Germany, Russia, and Japan.
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In the end, it was the relative weakness of Eastern Europe and
China-their vulnerability to military, political, and economic intru-
sion in their protracted stage of preconditions-that provided the
occasion for the First World War, the Second World War, and the
Cold War in its first phase.
The ambiguity about the future control of Eastern Europe-and
the large implications for Eurasian and world power of who did
control it-set the stage for the struggle of 1914-18. The possibilities
of joining Japan's hegemony in China with a German victory in the
West, made conceivable by prior German dominance of Eastern
Europe, set the stage for the struggle with the Axis of 1939-45.
Stalin's vision (and, later, Mao's) of pressing beyond the advanced
positions acquired in Eastern Europe and China to achieve a defini-
tive Communist victory, set the stage for the Communist duel with
Truman. This third Eurasian struggle ended in at least interim stale-
mate with the success of the Berlin airlift in the West in the spring of
1949, and in the East, with the defensive victories of the reorganized
United Nations forces in April-May 1951, which set the stage for the
truce negotiations whose beginning was signalled by Malik in June.
Thus, as the world expanded out across Eurasia to replace the
world of 1815 and after, new major powers emerged. The old rivalry
of Britain and France was replaced by a new awareness of defensive
common interest; and the United States, sharing at one remove this
common interest, became the strategic reserve of the West. In that
role the United States was twice called on to help rescue the West
from military defeat, being required to intervene earlier, with greater
weight, in the Second than in the First World War, but still relying
on time, distance, and allies to see it through. In 1945-6, the United
States showed every indication of seeking again a degree of with-
drawal, although more limited than in 1919-20; but the inability
of Britain to sustain Greece and Turkey, the general deterioration of
the Western economic and political position in 1947, and the collapse
of Nationalist China, brought it back forthwith to bear directly the
brunt of the third muted Eurasian struggle, in which Truman duelled
successfully with Stalin and Mao to prevent a definitive loss of the
Eurasian power balance-a duel accomplished without substantial
warfare in the West, but at the cost of the Korean War in the East.
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We are asserting, then, that there is an inner continuity in the
three great struggles to be observed between 1914 and 1951. This
continuity arises from the successive temptation of three powers-
Germany, Japan, and Russia-to exploit their newly achieved
maturity and the vulnerability of the still transitional societies of
Eastern Europe and China, to attempt to seize control of the Eurasian
arena which emerged from the spread of industrialization over the
previous century. Each effort failed because a fourth power had
simultaneously come to maturity-the United States-which shared
with Western Europe an interest in frustrating such a unilateral
dominance of Eurasia, and which in the end successfully made
common cause with the older mature powers, most notably
with Great Britain.
THE CHOICE OF AGGRESSION
This argument has thus far by-passed the deeper reasons for certain
societies having succumbed to the temptations and fears offered by
the state of the Eurasian arena as they approached maturity; and
it has by-passed also the reason for the failure of the United States
and the West to take the forehanded steps necessary to make the
choice of aggression unattractive. The stages-of-growth analysis
does not pretend to explain all of history: there are factors at work,
relating to the onset of the great wars and power struggles of the
twentieth century, which are quite independent of the analysis
presented in this book. Nevertheless, the stages-of-growth throw
some light on these more profound questions.
So far as the First World War is concerned there is a kind of
stumbling of men into a conflict whose dimensions and consequences
they did not understand or correctly measure. Nevertheless, at its
basis was the fact that the Austro-Hungarian Empire was in an
early preconditions stage, a rural-based traditional society breaking
up, which could not cope with or harness constructively the surging
nationalism of the Eastern European peoples stirred by what was
going on in Russia, Germany, and still further to the West. That
nationalism asserted itself in such a way as to set up in the East the
threats and attractions of either Russian or German domination;
and so the setting of the First World War was created.
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The choice of aggression
But, it is fair to ask, why did Germany not concern itself exclu-
sively with the expansion of consumption, as it moved into and
beyond maturity? The short answer is that the grip of the Kaiser,
and those around him, made impossible an immediate concentration
of German resources and energy on creating an age of high mass-
consumption. Why, then, were such men in control of Germany?
To answer this question one must go back to the origins of modern
German nationalism and to the concept emphasized in chapter 3;
namely, that in many cases-including Germany-a reactive ambi-
tious nationalism lay initially at the basis of modernization, or was
a very strong force within it. Modern Germany has had to pass
through much travail before the marks of its birth, in the diversion
and capture of the liberal Revolution of 1848, were substantially
removed; and we cannot yet be wholly sure of the outcome. A part
of the answer to the question of why Germany succumbed to the
temptations of power in 1914-rather than to the blandishments
of high mass-consumption-lies, then, in the nature of the motiva-
tions which launched Germany on the path to modernization.
So far as the Second World War is concerned we must first look
at what happened between the wars in the United States and the
West, if we are to find a connexion with the stages-of-growth. The
United States fell into a depression which, if we are correct, was
peculiarly intractable because of the nature of the full-employmen
problem in the era of high mass-consumption; and with the depres-
sion of the 1930's on its hands many liberal Democrats as well as
traditionally isolationist Republicans were, in effect, isolationists.
Down to the Fall of France in 1940, there was an isolationist
majority in the United States, in part-but only in part-because of
an obsession with domestic affairs related to a breakdown in the
dynamics of the growth stages.
In Western Europe, if our view of inter-war stagnation is correct,
Britain and France failed to maintain momentum-and inner con
fidence-because the nature of their societies and their public
policies failed to permit a quick and decisive movement into the
age of high mass-consumption. Their leaders-and in a sense, their
peoples as a whole-had their eyes fastened on a return to a normalcy
defined in terms of memories of the world that was before 1914.
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The sluggishness that resulted-a sense of waning powers, accom-
panied by distracting domestic conflicts and problems-contributed
to (no more than that) the grave diplomatic failure to halt German
and Japanese aggression at a sufficiently early stage.
In Japan, as in Germany, the most powerful opposition to the
Western-oriented, relatively pacific politicians of the 1920's came
not from men determined to carry the Japanese economy into the
age of high mass-consumption, but from men whose roots and
ambitions reached back to the origins of Japanese modernization
in a reactive nationalism, full of fear and hope. And so, when the
depression came, and the fragile international system reconstructed
after Versailles collapsed, throwing each nation back on its own
resources, policies, and heritage, they took over and had their
fling.
Something of the same can be said of Stalin's choice probably
made definitively at the end of 1945 or early in 1946. There was
a widespread hope within Soviet society as well as outside, at the
end of the Second World War, that Russia, having survived destruc-
tion and emerged as a Great Power-its government and peoples
having, in the end, performed in a great national tradition-would
turn its resources and attention primarily to reconstruction and
to the welfare of the Russian peoples, accepting the concept of
Big Three unity offered in evident good faith during and immediately
after the war. Here again the distractions of the United States and
the West at home-leading, for example, to helter-skelter American
disarmament and a vacuum in Eastern Europe-combined with
the evident opportunities for Communism in China-proved too
great a temptation. The world supplied an extraordinarily attractive
setting for Soviet expansion in the immediate post-war years.
But what about the demand side of the equation? Why did Stalin
-like the Germans and the Japanese before him-decide not to
turn to domestic welfare as a primary goal? Why did he not set
aside the temptation to expand Soviet power unilaterally? Again
one must look back to the reactive nationalism which helped create
modern Russia, and which became woven into the peculiar impera-
tives of Communist ideology and domestic policy, a problem con-
sidered in chapter lo. What is clear-as a simple matter of fact-
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is that Stalin was not prepared in the post-war years to accept and
face all the domestic consequences of the age of high mass-
consumption. He gave a high priority to expanding Soviet power
in the world arena.
The stages-of-growth do, then, throw some light on-but they
do not pretend to explain fully-the great power struggles of the
twentieth century. But that, after all, is one of the major conclusions
of this book-that economic forces and motives are not a unique
and overriding determinant of the course of history.
Our concern here is, then, rather narrow. It is to make clear that,
to the extent that the great struggles for power of the twentieth
century have an economic basis, that basis does not lie in imperialism,
or in compulsions arising from an alleged monopoly stage of
capitalism; nor does that basis lie even in an automatic oligopolistic
competition over colonies: it lies in the contours of the Eurasian
arena of power, as determined by relative stages-of-growth and of
military potential. And quite particularly it lies in the temptations
and fears of certain new mature powers with respect to the transi-
tional societies that lay close by, in Eastern Europe and in China,
societies that were by-passed in the series of take-offs that got under
way in, roughly, the third quarter of the nineteenth century, which
destroyed the world of 1815 and after.
THE NEXT PHASE: NUCLEAR WEAPONS AND THE
FURTHER SPREAD OF INDUSTRIALIZATION
It may seem odd that this analysis is broken off in 195 1. The struggle
between the Communist world and the West by no means ended
with the Korean truce, as any day's newspaper reveals. Nevertheless,
some time in the early 1950's the shape of that struggle altered its
character due, on the one hand, to the full emergence of the new
weapons, notably the H-bomb; and, on the other hand, to the
gathering implications of the growth process at many points in the
world.
Historians are thus likely to recognize the existence of a water-
shed in the early 1950's which quite sharply distinguishes, say, the
first six post-war years from the problems and events that have
followed.
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In any case, we turn in chapter 9 to examine the problems and
prospects that confront us now that man has pressed his control
over his physical environment to the point where the destruction of
organized life on the planet is technically possible, in a setting where
the stages-of-growth move forward not only in the northern half
of the globe, whose story dominates the history of the past two
centuries, but in the southern half of the globe, and in China
as well.
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THE RELATIVE STAGES-OF-GROWTH AND
THE PROBLEM OF PEACE
In this chapter we leave the relatively safe world of history to examine
the implications for the future of the onward march of compound
interest in the various parts of the world when combined with a not
wholly unrelated fact; that is, the existence of modern weapons of
mass destruction. And having stated., in terms of the stages-of-
growth, where it is that the nations stand and appear to be going,
we shall suggest briefly and in broad terms how we might go about
solving our great common problem-the problem of reasonably stable
and secure peace.
THE REVOLUTION IN WEAPONS
First, the weapons and what they have done and are doing to the
world arena of power.
There is the story of an American negro community, set in a
southern farming area, which was beset with drought. Finally,
under the guidance of their pastor, they turned to prayer. For a
time they prayed; but the sun continued to shine with a bright
cruelty; and the corn stalks were stunted and beginning to wither
at the edges; and the cracks multiplied in the dry ground. Then,
at last, it rained. At first they wondered at the miracle and were
grateful. But as the rain persisted, day and night, beginning to
wash away the stunted growths, they grew restive; until the pastor,
feeling a special responsibility, resumed the monologue: `Lord,'
he said, `we suffered from drought; we prayed; and we asked for
rain. But what you've given us is plumb ridiculous.'
For the United States and its allies in the Second World War,
haunted since 1939 by the sure knowledge that somewhere in
Germany lay all the scientific clues to atomic weapons, the common
achievement of the first atomic weapons was, indeed, providential.
But this extension of man's ability to manipulate his environment-
the ultimate military achievement of the Newtonian outlook, by
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non-Newtonian physics-has produced a military situation which
is, truly, plumb ridiculous.
On the one hand, the Soviet Union, the United States, and Britain
have in their hands-and soon France and others will have in their
hands-instruments which grossly surpass in their destructive power
anything that has gone before; but their use, now the monopoly is
broken, presents the risk of triggering circumstances, if not a direct
response, which will destroy the user and us all.
In a technical sense, what has happened is that the proportionality
between industrial potential and usable military force-a propor-
tionality which had existed for about a century and a half-has now
been violated. The destructive capabilities of science and technology
have gone on increasing at an accelerated pace; but the surface of the
globe is fixed in size and can be blanketed. The powers of destruc-
tion have thus passed into the area of decreasing marginal produc-
tivity-if not negative productivity. It is true that the Great Powers,
or those who wish to exercise a degree of influence in the muted chess
game of the atomic arms race, continue to concentrate vast resources,
including a high proportion of their scarcest creative talents, on the
production of weapons, means of delivery, and means of defence.
But the circumstances in which these weapons can be rationally used
become progressively more narrow. Indeed, as the number of powers
merely possessing the weapons expands-as we move from duopoly
out to nuclear oligopoly-the uncertainty and danger arising from their
very existence increases, quite apart from the danger of their use.
Of course, a lead by any one power sufficiently great to destroy
the retaliatory capacity of all others at a blow would render world
domination-for what it might be worth-a possible short-term
objective, if that power were to undertake the risks before God and
man of initiating such an attack (called antiseptically, in the military
literature, a pre-emptive attack).* A great deal of effort and resource
* Strictly speaking, a pre-emptive attack in, for example, Soviet military literature,
is to be launched only when it is judged that the other party is preparing to initiate major
war, but has not yet struck his initial blow. But with two powers geared to the possibili-
ties of launching pre-emptive attack, the possibilities of a spiralling tension leading to
an initiation of major war are evident enough. Moreover, preparations for pre-emptive
attack would serve also for an attack launched when Moscow might become convinced
that its lead in weapons, means of delivery, and means of defence was sufficiently great
to justify rationally the initiation of a decisive blow.
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is now flowing in the Western world to avoid offering that awful
temptation to Moscow. And this effort is wholly justified: in my
view it is not sufficiently large.
But aside from the logic of deterrence, it would almost seem that
some cosmic joke has been played on man: he has been permitted
to create weapons which concentrate tremendous power in the
hands of a few technologically mature societies; but the net effect
is to reduce rather than to increase the ability of those favoured
societies to apply military force rationally.
Whatever the nature and source of the paradox, the fact is surely
this: the military and foreign policies of the major powers are now
being conducted at two distinct and only tenuously related levels :
one the level of mutual deterrence-of mutual frustration with mass
weapons; the other, the softer level of diplomacy, economic policy,
and conventional weapons of a low order where the main business
of the world goes on.* In this softer struggle the major powers from
day to day operate under great restraint with respect to powers whose
military potential in no way approximates their own.
Setting aside the arms race among the industrial giants-which
fills our minds with images of a bi-polar or barely oligopolistic
world-the fact is that effective power has been rapidly diffused
since 1945. The paradox of atomic weapons has permitted the lesser
powers degrees of bargaining freedom they would not have if
military force had not taken so violent and discontinuous a technical
leap.
Tito began the exploitation of this paradox, in a sense, with his
successful defiance of Stalin in 1948; but in different ways on dif-
ferent issues Nehru, Nasser, Ben-Gurion, Adenauer and many
others have found ways of exploiting this paradox within the non-
Communist world; and Mao and Gomulka as well as Tito have
done it within the Communist bloc. The lesser power cannot always
pull it off, as the young Hungarians in Budapest discovered in
October and November of 1956; but they were not defeated with
atomic weapons. They were defeated in a police action, by the
* The two levels of activity are linked by the method of nuclear blackmail, in which
the threat of nuclear attack is evoked to strengthen a move in which softer weapons are
applied; for example, the Soviet threats in the context of the Suez, Lebanon, and Berlin
crises of 1956-9.
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crudest kind of infantry and tank combat, in a victory for which
Moscow had to pay a high price in the other area of struggle; that
is, the non-military struggle of diplomacy and ideology.
In short, societies still in the preconditions period, like Egypt,
or in the early stages of take-off, like India and China and Yugo-
slavia, have been able to behave in world diplomacy on a significant
range of issues-not on all issues, but over a significant range-as
the equivalent of major powers; and this is due to the paradoxical
character of the new weapons and the diffusion of effective power
they have brought about, in the setting of nuclear stalemate.
THE DIFFUSION OF POWER IN THE LONGER RUN
What we can observe in the past decade foreshadows a long-run
trend; for in the longer run, the diffusion of power will acquire a
firmer base, even, than the paradoxical impact of the new weaponry.
Just as the forward march of the stages-of-growth in the latter
half of the nineteenth century shaped the world arena of the first
half of the twentieth-bringing Japan, Russia, Germany, France,
and the United States into the arena as major powers-so sequences
of change, long at work, and gathering momentum in the post-1945
years, are determining the somewhat different world arena now
coming to life.
For the central fact about the future of world power is the accelera-
tion of the preconditions or the beginnings of take-off in the southern
half of the world : South-East Asia, the Middle East, Africa, and
Latin America. In addition, key areas in Eastern Europe (notably
Yugoslavia and Poland), and, of course, China, are hardening up,
as their take-offs occur; and while they remain vulnerable to military
conquest and occupation (like, say, mature Denmark) they have lost
or are losing their old spongy character as societies in awkward
transition from traditional to modern, regularly growing status.
The arena over which the First and Second World Wars were
fought and the first phase of the Cold War as well, no longer exists.
Put more precisely, the take-offs of China and India have begun.
Pakistan, Egypt, Iraq, Indonesia and other states are likely to be
less than a decade behind-or at least not much more, given the acute
pressures to modernize now operating on and within their societies.
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And in Latin America the take-off has been completed in two
major cases (Mexico and Argentina); and it is under way in others,
for example, in Brazil and Venezuela.
In short, looking ahead some sixty years it can be said with
reasonable confidence that the world will contain many new nations
which have achieved maturity. They may not be rich in terms of
consumption per head; they may not yet be prepared by the turn
of this century to plunge into the age of high mass-consumption;
but they will have the capacity to apply to their resources the full
capabilities of (then) modern science and technology.
To make this notion still narrower and more concrete, it is fairly
safe to predict that, by 2000 or 20I0-which is not all that far away-
India and China, with about two billion souls between them, will be,
in our sense, mature powers. They may not be ready for the age of
the mass automobile; and it is by no means assured that Communism
will then dominate China, and democracy India. China and India
face many difficult choices and vicissitudes in the years and decades
ahead. But it is reasonably clear that compound interest has come to
be built into those two massive societies; and three generations of an
environment of growth should produce maturity-perhaps less than
that, if China maintains forced draft and solves the food problem.
Compound interest will, of course, continue to operate in the
societies which have already achieved or passed beyond maturity.
Their gross national products will almost certainly rise-unless they
opt radically for leisure-and their virtuosity in modern weaponry
will increase, if the arms race continues. But so long as the military
stalemate is maintained, this process is likely to add little to their
capacity rationally to use military force. Meanwhile, unless an
effective system of arms control is introduced, the newer powers
are likely to acquire, in one way or another, a sufficient atomic
weapons capability to enter into and to complicate the chess game
of the arms race, if not to dominate it; and within the limits set by
the arms race, they will be in a position to assert their interests
with increasing effect.
It is true that some increase in rationally usable force may emerge,
as limited war capabilities develop and the antagonists feel their
way towards common-law rules that permit some clashes of force
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to occur without spiralling into an unwanted exchange of all-out
nuclear attack. But so long as each side is believed capable of shield-
ing a substantial delivery capability from sudden decisive nuclear
attack, the use of force by the major industrial powers is likely to
remain rational only over a narrow range. And beyond the require-
ments of security policy, the bulk of the increase in output is likely
to be channelled into consumption, even in the presently Communist
states.
Thus, the most likely prospect-ruling out both major war and
the organization of an effective system of arms control-is for the
newer industrial states to narrow the gap between their own military
capabilities and those of the existing industrial powers.
The central fact to which all nations must foreseeably accommo-
date their policies,-then, is the likelihood that the arena of power
will enlarge to become, for the first time in history, truly global;
and that the centres of effective power within it will increase. The
image of a bi-polar world, in which all but Washington and Moscow
are spectators, is inaccurate now, and it will become progressively
more inaccurate with the passage of time. Although still gripped in
an essentially bi-polar arms race, we are, in fact, approaching an
age of diffused power, in which the image of Eurasian hegemony-
fearful and enticing-will lose its reality, and world domination will
become an increasingly unrealistic objective-assuming, always,
maintenance of nuclear stalemate.
THE PROBLEM OF PEACE
This is the setting in which the problem of peace is confronted.
Technically, the problem of peace consists in the installation of a
system of arms control and inspection within a level of armaments
agreement, which would offer all powers greater security than that
now afforded by an arms race of mutual deterrence. Given the
nature of modern weapons and the opportunities for their conceal-
ment, this, in turn, requires that all societies be opened up to inspec-
tors who would have, in effect, bank inspectors' privileges: that is,
they could go anywhere, at any time, without notice.
The presence of a corps of such knowledgeable, mobile inspectors
(backed by free, mutual aerial surveillance) could not absolutely
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The problem of peace
guarantee that no atomic weapons were retained, contrary to agree-
ment; it could not absolutely guarantee that a surprise attack could
not be mounted; but it could produce a situation vastly less dangerous
than that with which we now live from day to day.
Moreover, despite honest and well-founded doubts and worries
the governments of the United States-and of the West as a whole-
would accept such a drastic alteration in national sovereignty if
they were convinced that the inspection privileges within the
Communist bloc were bona fide.
Finally, it is reasonably clear that if Soviet policy were governed
solely by criteria of national interest similar to those which govern
the policy of the United States and the West, such an agreement
would now be made.
THE RUSSIAN NATIONAL INTEREST
Why should Russia now join in an effective system of arms control,
on national grounds?
Having failed in the immediate post-war bid to convert the con-
fusions of Europe and Asia into a prompt Eurasian hegemony for
Communism dominated from Moscow, and ruling out a successful
sudden nuclear attack-based on the achievement of radically superior
technical capabilities-what is the prospect for Russia? The prospect
for Russia is to see vast new nations come into the world arena
which Russia cannot control. Moreover, as atomic weapons capa-
bilities spread, these new nations will be in a position to take actions
which might precipitate a war disastrous to Russian interests. The
basic Russian national interest, with respect to both the new weapons
and the rise to maturity of new nations, is a defensive interest,
essentially similar to that of the United States, Western Europe, and
Japan.
The one great option open to Russia, at this moment in history,
when it shares Great Power nuclear status with the United States
and Britain, among the older nations of the north, is to create an
effective system of arms control; and to concentrate its efforts, along
with those of others, on making the system work. The common
objective would be to make the system of arms control so solid and
secure over the coming decades, that, as these massive new nations-
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China and those of the south-come into maturity they enter a world
of orderly politics rather than one where the power struggle persists
with weapons of mass destruction still one of the pawns. In the
face of the diffusion of power being brought about by a new series
of take-offs, the Russian national interest shifts closer to that of
the United States and the West. The old Eurasian struggle, based
on the vulnerability to intrusion of Eastern Europe and China in
their preconditions period, is a part of the past.
It is evident that some perception of this problem already exists
in Moscow. It certainly lies behind the emphasis on ending H-bomb
tests, which would, in effect, freeze atomic weapons capabilities
more or less where they are. But this approach cannot hold up,
unless it is soon followed by the real thing: an effective inter-
national system of arms control. Put another way, the newer powers
(China, for example) and some of the older powers (France, Ger-
many, and Japan-and even Sweden and Switzerland) are unlikely
to permit weapons capabilities to be limited to the Big Three, while
the Cold War goes on in its old terms, merely without H-bomb tests.
In short, it is not a realistic option to conceive of a continued
bilateral or trilateral world of atomic powers blocking the others out,
but continuing the competitive game of Cold War; nor is it a realistic
option to conceive of a world controlled by Washington, Moscow,
or both. But the present Great Powers do have one realistic option :
it does lie within their grasp to make the terms and the setting
within which power will be diffused, as new nations take off and
march to maturity; but that is the historical limit of their powers,
except, of course, to blow the whole world up.
The diffusion of power can be rendered relatively safe or very
dangerous; but it cannot be prevented. The process of growth and
the stages at which various nations now stand rule out equally the
notion of an American century, a German century, a Japanese
century, or a Russian century.
The rational policy for a nationalistic Russia would be, then, to
exercise this moment of option to join the United States in imposing
mutually on one another and on the world the one thing the world
would accept from the two Great Powers; that is, an effective inter-
national system of arms control.
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It may have been considerations of this kind which shaped Presi-
dent Eisenhower's peroration, when he spoke-evidently to Moscow
-at the United Nations Assembly during the Middle East debate
of 13 August 1958, as follows :
As I look out on this Assembly, with many of you representing new
nations, one thought above all impresses me. The world that is being
remade on our planet is going to be a world of many mature nations. As
one after another of these nations moves through the difficult transition
to modernization and learns the methods of growth, from this travail
new levels of prosperity and productivity will emerge.
This world of individual nations is not going to be controlled by any one
power or group of powers. It is not going to be committed to any one
ideology. Please believe me when I say that the dream of world domina-
tion by any one power or of world conformity is an impossible dream.
The nature of today's weapons, the nature of modern communica-
tions, and the widening circle of new nations make it plain that we
must, in the end, be a world community of open societies. And the
concept of the open society is the key to a system of arms control we can
all trust.
MOSCOW'S PROBLEM OF ACCEPTANCE
But the acceptance of some such proposition means that Moscow
would have to abandon the notion of world domination and accept
explicit status as a major, responsible nation-state in a world of
powerful nation-states, all of whom had largely abandoned the right
to kill other peoples in the pursuit of the national interest.
It is extremely difficult for Moscow to act on this perception about
the diffusion of power-which is probably growing among Russians
-because in two fundamental respects Soviet policy is not deter-
mined by conventional criteria of the national interest.
First, externally, the Soviet government is committed to strive
in the direction of world hegemony for Communism. In fact, since
shortly after the November Revolution, this has been interpreted
operationally as an effort to maximize the effective power exercised
from Moscow, rather than in simple ideological terms. Tito was
not the first Communist to discover that when a clash existed
between the degree of power exercised from Moscow and the spread
of Communism as an ideology, Moscow would opt for the former.
Put another way, if the problem were merely external commitment
of Moscow to Communism, it would not be too difficult to resolve
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it by a de facto acceptance of national status for the Soviet Union
accompanied by a maintenance of the rhetoric of the old-time world-
domination religion. A nation's rhetoric can persist for a long time,
as familiar, comforting, background music, after it has lost its
relationship to reality.
It is the second, domestic dimension of the problem which makes
it so searching and serious for Russia and for the world. For the
acceptance of conventional national status, within an effective arms
control system, would require not merely a change in Russia's
relation to the world, but also basic and revolutionary changes in
the relation of the Russian state to the Russian peoples.
For forty years now men have been told in Russia that fixed laws
of history decree that the external world is implacably hostile and
must ultimately be conquered; that this inescapable struggle justifies
and requires a high degree of secret-police control within the Soviet
Union; and that this inescapable struggle requires extraordinarily
high allocations to investment and military purposes. On these
three propositions-external hostility, internal police-state control,
and austerity-the whole of Soviet policy has been based for two
generations; the institutions of the Soviet state; and Soviet political
economy as well. Each would be shattered if an effective system of
arms control were to be installed within the Soviet bloc.
Why is this so? It is so because an effective system of arms control
would, in effect, create an open society in Russia. How could the
police state-whose rationale down to today rests on the assumption
of spying, sabotaging foreigners-how could the police state be
justified when the Russian peoples were informed that Russian
security rested on an exchange of men with bank inspectors' privi-
leges; and westerners were turning up any time, anywhere, through-
out Russia, without notice to Russian officials? And how could
Russia avoid the age of durable consumers' goods and services, if
something like 20% of GNP-which now goes into the Soviet
military budget-were released from military to civil outlays? In
short, the case for hostility, for the secret police, and for austerity
would be broken; the case for democracy and welfare would be
overwhelming, if an effective international arms control system were
installed.
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lvioscow's problem of acceptance
It is this set of converging revolutionary consequences for Soviet
domestic rule that makes the problem of peace so difficult; for
whether the Russian price- and income-elasticities of demand prove
to be similar to those of the United States and Western Europe,
it is clear that the open society and age of high mass-consumption
implicit in effective control of armaments would require drastic
revisions in the conceptions and institutions of the Soviet Union
of a kind that working politicians will go a long way to avoid.
At the moment the Soviet Union is a society technically ready for
the age of high mass-consumption; it is structurally ready in terms of
the education and skills of its working force; it is psychologically ready
and anxious, as evidenced by Soviet literature, by Soviet politics, and,
indeed, by trends in the Soviet economy, where the demands for hous-
ing and durable consumers' goods are beginning to assert themselves;
but the regime is straining to hold the dam, to control the bulk of
the increment to annual income for military and investment purposes.
In terms of the stages-of-growth, Russia is a nation seeking to
convert its maturity into world primacy by postponing or damping
the advent of the age of high mass-consumption. But it is doing so
not because the prospects for a temporary victory over the West are
all that good; not because Russian security could not be more cheaply
and effectively insured; not because it is in the Russian national
interest to continue the arms race-for the contrary is the case-
but because Communism is a curious form of modern society appro-
priate only to the supply side of the growth problem: perhaps for
take-off, although this is still to be proved, given Communism's
inherent difficulties in agriculture; but certainly it can drive a society
from take-off to industrial maturity-as Stalin demonstrated-once
its controls are clamped upon that society. But in its essence Com-
munism is likely to wither in the age of high mass-consumption;
and this, almost certainly, is well understood in Moscow.
THE GREAT ACT OF PERSUASION
How, then, are we going to persuade the Russians to face up to the
fact of the diffusion of power on the world scene; to accept the
consequences of peace and the age of high consumption; so that
they can go forward with the rest of the human race in the great
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struggle to find new peaceful frontiers for the human experience?
Essentially we in the non-Communist world must demonstrate three
things.
We must demonstrate that we shall not permit them to get far
enough ahead to make a temporary military resolution rational.
We must demonstrate that the underdeveloped nations-now the
main focus of Communist hopes-can move successfully through
the preconditions into a well established take-off within the orbit of
the democratic world, resisting the blandishments and temptations
of Communism. This is, I believe, the most important single item
on the Western agenda.
And we must demonstrate to Russians that there is an interesting
and lively alternative for Russia on the world scene to either an arms
race or unconditional surrender.
But the great act of persuasion has an extra dimension: and that
extra dimension is time. For this searching problem of transforma-
tion Russians must solve for themselves; and it will take time for
them to do it. The rest of the world can make it easier rather than
more difficult for the Russians: by creating a setting which rules
out the apparently cheap solution of either military or political
victory; and by articulating persuasively a vision of where we would
like everyone to fetch up, sufficiently precise so that Russians can
soberly weigh the advantages against the costs of an arms control
system. But it will take time for Russians to accept and absorb
the implications of the new world of diffused power. It will take
time for Russians to accept that their only rational destiny is to
join the great mature powers of the north in a common effort to
ensure that the arrival at maturity of the south and of China will
not wrack the world as the arrival at maturity of Japan, Germany,
and Russia itself did at an earlier time; for with nuclear weapons,
that old national self-indulgence-seeing how far you can go towards
world power when you reach maturity-this sport of the Kaiser
and Hitler and the Japanese militarists and Stalin-can no longer be
safely afforded.
Specifically, it is likely that the Buddenbrooks' dynamics will
operate in Russia, if given time and a strong Western policy that
rules out as unrealistic Soviet policies of expansion-whether hard,
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soft, or mixed. Recall, if you will, how Stalin created and supported
a generation of modern technicians, to supplant the old Bolsheviks,
whose skills in the dialectic and in conspiratorial politics no longer
suited the Russian age of steel and machine tools and modern armies.
The cadres of the i93o's-the second Soviet generation-are now,
or soon will be, the men who `decide everything'; but their children
-taking a modern industrial system for granted-are reaching out
for things that the mature society created by Stalin cannot supply.
What is it we can detect moving in Soviet society? An increased
assertion of the right of the individual to dignity and to privacy; an
increased assertion of the dignity of Russia-as a nation and a
national culture-on the world scene; an increased assertion of the
will to enjoy higher levels of consumption, not some time in the
future, but now; an increased appreciation of the way that modern
science has altered the problem of power, including certain old and
treasured military maxims, both Russian and Communist in their
origins.
These trends, pushing Russia broadly in the directions of national-
ism and welfare which are required to make the great act of persua-
sion work, have certainly not yet triumphed in Soviet society or
in Soviet policy. Moreover, there is no reason to believe that these
underlying trends will automatically work themselves out smoothly
and peacefully. On the other hand we should be aware that the
dynamics of the generations within Soviet society-and notably
the trends in the first post-maturity generation-combined with the
diffusion of power on the world scene, could, in time, solve the
problem of peace, if the West does its job.
The kinds of issues now in contention have, in the long sweep
of the past, normally led to war; namely, a tangling of issues of
both power and ideology. Generally men have preferred to go down
in the style to which they had become accustomed rather than to
change their ways of thinking and of looking at the world. There are
no grounds for viewing the future with easy optimism; but, when
combined with the operation of the Buddenbrooks' dynamics, the
existence of the new weapons and the sequence of take-offs in Asia,
the Middle East, Africa, and Latin America may permit us to get
through by posing for Russia prospects judged, in the end, even
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more dangerous than the acceptance of the age of the mass auto-
mobile, the suburban one-family house, and free mutual inspection.
The concept of the stages-of-growth does, then, throw a little
light on the shape of the future and the problem of peace. It helps
prepare our minds-and, one would hope, our nations' policies-
for the world of diffused power into which we shall enter, and into
which we have to a degree been prematurely plunged by the paradox
of the new weapons. It helps give a rough time-dimension to the
emergence of China and the nations of the south to maturity; that
is, if it is agreed that many of the new nations, Africa apart, which
have not yet entered into take-off are likely to do so within about
a decade. It throws some light on the nature of Moscow's difficult
problem of accepting the diffusion of power abroad, and of accepting
at home the primacy of welfare and an end to the police state. And
it helps define the area of hope in the quite technical sense developed
in chapter 7; that is, we can see a possibility of forces within Soviet
society which might opt for a different balance among the three
major directions in which the capabilities of a post-maturity eco-
nomy may be turned : in this case, away from the pursuit of power
towards enlarged consumption and human welfare in the widest
sense.
BEYOND PEACE
History and danger to the peace will, of course, not end with the
Soviet acceptance of the age of durable consumers' goods, even
when accompanied by acceptance of an effective international inspec-
tion system. It is quite true that societies caught up in the process
of translating industrial potential into the satisfaction of consumers'
wants and diffusing the new goods and services on a widening basis
are likely to generate powerful checks against aggression and an
increased willingness to accept dilutions of sovereignty to preserve
a reasonably comfortable status quo. But it is contrary to the whole
spirit of this analysis to make a simple mechanical association of this
kind between peace and high mass-consumption. This is an analysis
which presents, not iron-clad imperatives, but choices for men.
And, moreover, there is much history that lies beyond the water-
shed we are all trying to attain. For example, to name two great
issues beyond the control of armaments, there will certainly be the
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problem of north-south relations, on a global basis, when all societies
are modernized, in many ways a racial problem; and there will be
the not simple problem of maintaining an arms control system for
a long period, once it is established.
THE SIGNIFICANCE OF THE DIFFUSION OF POWER FOR
WESTERN EUROPE
A word, now, about a particular aspect of this analysis: namely, its
implications for the present and future role and status of Great
Britain and, indeed, of Western Europe as a whole, in the world
arena of power.
In March 1958 Punch published a poem which contained these
lines:
When Britain first at Heaven's command
Arose from out the azure main
She scarcely foresaw how NATO planned
To plunge her right back in again.
Cool, Britannia, beneath the nuclear wave;
While the bigger, bigger nations misbehave.*
If the picture drawn in this chapter of the implications for the
future of the stages-of-growth is a roughly correct picture, the
implications of this poem-and the mood that underlies it-are
excessively pessimistic. Of course, the `bigger, bigger nations' may
in fact blow us all up; but, in terms of the jobs that need to be
done in a World of diffusing power there is ample scope for Britain
and Western Europe to play roles of dignity, initiative, and respon-
sibility. The arms race tends to mislead us as to what really is going
on and what most needs to be done.
For example, Britain and Western Europe have the resources and
the pool of technical assistance to play a major-even a decisive-
role in making sure the underdeveloped areas of the non-Communist
world move through the preconditions and through take-off without
succumbing to that peculiar and intractable form of modern societal
organization called Communism. And the British Commonwealth
structure offers a basis and pattern on which the alternative to
colonialism can be built with will and resources. There is no reason
* Paul Dehn, Punch, 19 March 1958.
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in the world, for example, why Britain should not lift its eyes from
fair shares and hire-purchase and focus, as a major national enter-
prise, on making a success of the Indian third Five Year Plan on
which, operationally, the future of the Commonwealth so largely
depends. Western Europe has a major role to play, as well, in the
more constructive aspects of the great act of persuasion-in the
process of initiative, communication, and negotiations with the
Communist world. And these nations can even make-as Britain
is now making-a significant military contribution to the deterrence
of war, both nuclear and limited.
There will be, of course, no return to the old-fashioned empires,
of the kind that were created and built in the pre-1914 era. The
traditional societies have moved too far into the preconditions for
take-off for that to be possible. On the other hand, if our minds
are cleared of the illusory notion that total power has somehow
passed from Western Europe to Moscow and Washington; if we
look at the world as it is, and as it is becoming; if we look at its
possibilities as well as its dangers, it becomes clear that we are trying
to create and organize a world of middling powers who, foresee-
ably, will share all the tricks of modern technology. In fact it
is only on a very narrow range of issues that, even now,
Washington and Moscow can behave as anything else but middling
powers.
In this perspective there is little cause for excessive Western
European nostalgia or self-pity. And there is danger for us all in
the Little England, Little Europe policies this mood generates; for
there is a great deal, of first-rate importance, for Britain and Western
Europe to do to bring about the outcome we all seek which will not
and cannot be done unless they do it. The task is to isolate these
new challenges to make a new agenda; and then to wrest from the
enlarging resources of Western Europe a sufficient margin-despite
the pressures of the age of high mass-consumption-to do what can
and should be done. With certain limited exceptions in the arms
race itself, there is no contribution that the United States could and
should make to its own and the world's future that Britain and
Western Europe could not also make, on at least a proportionate
scale.
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The lesson of the stages-of-growth for the peoples of Britain and
Western Europe is that their fate is about as much in their own hands
as it has ever been-or, at least, it is no less so than for the other
peoples of the planet.
TAKE-OFFS, PAST AND PRESENT
The argument of this book-and, particularly, of this chapter-has
thus far assumed that it is useful, as well as roughly accurate, to
regard the process of development now going forward in Asia, the
Middle East, Africa, and Latin America as analogous to the stages
of preconditions and take-off of other societies, in the late eighteenth,
nineteenth, and early twentieth centuries. It is now time to ask: is
this analogy fair? Or, more particularly, what are the similarities; what
are the differences; and what implications flow from the differences?
Similarities
The similarities are straightforward enough. With respect to the
sectors, we can observe many problems and patterns familiar from
the past. Most of the presently underdeveloped nations, in the stage
of preconditions or early take-off, must allocate much of their
resources to building up and modernizing the three non-industrial
sectors required as the matrix for industrial growth: social overhead
capital; agriculture; and foreign-exchange-earning sectors, rooted
in the improved exploitation of natural resources. In addition, they
must begin to find areas of modern processing or manufacture where
the application of modern technique (combined with high income- or
price-elasticities of demand) are likely to permit rapid growth-rates,
with a high rate of plough-back of profits.
Many are also caught up in the problems of capital formation in
general, examined in chapter 4, where the inner mechanics of the
take-off is considered. They must seek ways to tap off into the
modern sector income above consumption levels hitherto sterilized
by the arrangements controlling traditional agriculture. They must
seek to shift men of enterprise from trade and money-lending to
industry. And to these ends patterns of fiscal, monetary, and other
policies (including education policies) must be applied, similar to
those developed and applied in the past.
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Moreover, the non-economic problems of these areas bear a
resemblance to those of the past which needs no forcing. At the
level of politics we can observe a spectrum of positions, with respect
to modernization, ranging from die-hard traditionalists to those
prepared to force the pace of modernization at any cost; and these
positions contend against each other. Moreover, the problem of
balance between external and internal expression of nationalist
ambition is present-acutely present-in almost every case. Above
all, there is continuity in the role of reactive nationalism, as an
engine of modernization, linked effectively to or at cross-purposes
with other motives for remaking the traditionalist society.
And more narrowly, the contemporary catalogue of necessary
social change is familiar to the historian: how to persuade the peasant
to change his methods and shift to producing for wider markets;
how to build up a corps of technicians, capable of manipulating the
new techniques; how to create a corps of entrepreneurs, oriented not
towards large profit margins at existing levels of output and tech-
nique, but to expanded output, under a regime of regular techno-
logical change and obsolescence; how to create a modern professional
civil and military service, reasonably content with their salaries,
oriented to the welfare of the nation and to standards of efficient
performance, rather than to graft and to ties of family, clan, or region.
Some Relative Differences
But there are differences as well, some making the contemporary
task of moving into a successful take-off more difficult, others making
it easier than in the past.
The most profound difficulty flows directly from a fact which
also provides the most profound current advantage; namely, the
presently underdeveloped areas have available to them an enormous
back-log of technology which includes the technology of public health.
Modern public health and medical techniques are extremely effective
and prompt in lowering death-rates; they require relatively low
capital outlays; and they meet relatively little social and political
resistance. Thus, the rates of population increase in the presently
underdeveloped areas are higher than those that generally obtained
in the stage of preconditions in the past.
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Take-offs, past and present
Historically, population rates of increase during the take-off
decades were generally under 1.5 % per annum. France was as low
as 0.5 %; Germany, Japan, and Sweden, about i %; Britain as high
as 1'4% only in the two decades preceding ,8zo. Nineteenth-
century United States (over 2'5%) and pre-1914 Russia (over
1.5 %) are the great exceptions; but in both cases these rates occurred
in societies rapidly expanding the area under cultivation. Aggre-
gated annual rates for the major underdeveloped regions of the
contemporary world are about as follows: Latin America, 2'5%;
South Asia, "5%; the Middle East, 2'3%; the Far East, 1.8 %;
Africa, 1'7%-
These higher rates of population increase impose a strain and
a challenge in both aggregative terms and, more narrowly, in terms
of the pace of the technological revolution in agriculture. Aggre-
gatively, if we take the marginal capital/output ratio at, say, 3, then
an extra 3 % of national income must be invested simply to counter
the margin of an extra i % increase in population. But given the
structure of consumption in these poor areas, the more significant
strain comes to rest on the problem of food supply, where a more
rapid diffusion of modern agricultural techniques is required than
in the past if the whole development process is not to risk frustration.
Politically and socially, the high rates of population increase
impose strain in other directions; for they raise the question of
chronic unemployment or partial unemployment. Unemployment
takes on a peculiar urgency, as a problem of policy, since the popula-
tions of these areas, notably their urban populations, live in a setting
of international communications which makes their frustration,
perhaps, more strongly felt than in comparable situations in the past.
The gap between existing levels of consumption and those which
might become possible-or which are thought to be possible-is
extremely vivid; and a sense of the gap is spreading fast.
Finally, the Cold War, which constitutes a part of the international
setting of the transitional process, affects its contours in various
ways. On the one hand, the pull and haul of Communist and non-
Communist security interests tends to divert attention, talent, and
resources away from domestic tasks of development, in certain of
the areas, notably those located close upon the borders of the
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Communist bloc. On the other hand, the ideological dimensions of
the Cold War heighten a sense of choice concerning the appropriate
political and social techniques for modernization, raising in particular
the question of whether the Communist method should be followed.
More than that, the existence of the international Communist
movement, with its explicit objective of take-over within the under-
developed areas, draws some portion of the literate elite away from
the current tasks of development and creates a special dimension of
schism which is costly to the national effort.
Some Relative Advantages
But the contemporary transitional areas also enjoy two substantial
advantages which were not available, in equal degree, in the past.
First, the pool of unapplied and relevant technology is larger than
it has ever been. Second, international aid in the form of technical
assistance, soft loans or grants-including flows of surplus food and
fibres-are a unique feature of the modern scene. In the past, of
course, transitional nations could come into the private international
capital markets to float bonds, notably for the building of social
overhead capital; and it was not unknown for them to soften their
loans by the somewhat crude device of default. But changes in the
structure of the markets, combined with the inherent instability of
their situation, have to a degree diminished the conventional flows
of private capital for social overhead purposes. The willingness of
the governments of industrialized nations to contemplate enlarged
soft loans and grants constitutes, thus, a potential compensation
for the diversionary and disruptive consequences of the Cold War.
THREE MAJOR IMPLICATIONS FOR POLICY
While the relative difficulties faced by contemporary transitional
nations are pressing hard upon them, the relative advantages are
being only indifferently exploited. Specifically, this rough balance-
sheet suggests three broad areas for concerted action, if the transi-
tional nations are to move through the preconditions and take-off
while maintaining the possibility of a progressively more democratic
political and social development.
First, the potentialities of known technology capable of raising
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the productivity of agriculture must be brought to bear more
purposefully and rapidly than at present. Although, evidently, the
earliest possible decline in birth-rates would ease the development
process, the known potentialities of irrigation, chemical fertilizers,
and improved seeds are capable of providing for some time an
increase in food consumption per head, even in the face of current
rates of population increase. The limitation lies mainly in the size
and competence of the pool of technicians willing and able to go
into the countryside to demonstrate patiently the advantages of the
newer methods. The danger to the level of welfare in contemporary
transitional societies does not lie in any inherent tendency for the
acceleration of investment to constrain consumption; for the tricks
of agricultural productivity are highly productive and prompt in
their effect. The danger lies in the sluggishness of the leadership
in facing squarely the problem of agricultural productivity and
organizing the human and material resources necessary to accelerate
the diffusion of well-known techniques.
Second, the potentialities of external assistance must be organized
on an enlarged and, especially, on a more stable basis. With current
levels of population increase and current levels of both domestic
capital formation and external aid, an increase of the order of some
$4 billion in annual external aid would be required to lift all of
Asia, the Middle East, Africa, and Latin America into regular
growth, at an increase of per capita income of, say, z.5 % per annum.
In many areas the preconditions process is not sufficiently advanced
to permit external capital to be productively absorbed on the scale
implicit in such an aggregative estimate.* Realistic figures for
increased international aid are lower. What is clear is that the present
level of external assistance is substantially inadequate to the task
of out-racing the rate of population increase in many key regions
where capital might be productively absorbed. But even more
important than the question of enlarged scale is the issue of con-
tinuity of aid. The analysis of the preconditions process in chapter 3
emphasized the crucial importance of the political decision within
a transitional society to focus a high proportion of energy, talents,
* For the calculations and assumptions yielding this estimate see M. F. Millikan and
W. W. Rostow, A Proposal (New York, 1957).
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and resources on domestic development as opposed to alternative
expressions of nationalism. If the local political leaders are to commit
their fortunes to this course, they must do so with the maximum
confidence that over their horizon of policy-making (say, five years)
they can know that a reasonable level of assistance will be sustained.
Absorptive capacity itself is, in large part, a product of the extent
to which governments mobilize their own resources around the
development problem. Thus, the amount of capital productively
absorbable in transitional societies partially depends on the scale
and continuity of the offer of external assistance.
In the end, however, the task of development must be done by
those on the spot. The non-Communist literate elites in these
transitional societies bear a heavy responsibility for the future of
their peoples. They have the right to expect the world of advanced
democracies to help on an enlarged scale, with greater continuity;
but it is they who must overcome the difficulties posed by the rapid
diffusion of modern medicine, and ensure that the humane decision
to save lives does not lead to an inhumane society. It is they who
must focus their minds on the tasks of development, despite the
temptations to press nationalism in other directions and to surrender
to the distractions of the Cold War. It is they who, having helped
achieve independence, under the banners of human freedom, appeal-
ing to those values in the West which they share, must now accept a
large part of the responsibility for making those values come to life,
in terms of their own societies and cultures, as they complete the
preconditions and launch themselves into self-sustained growth.
The upshot for those who live in contemporary transitional
societies is clearly not pre-determined either by the patterns of
history or by the nature of the technical tasks of growth or by the
balance of the Cold War. The historical stage at which their societies
stand, the pool of unapplied and relevant technology, and the world
setting in which they find themselves set the limits and the possi-
bilities of their problems. But like other peoples at great moments
of decision, their fate still lies substantially within their own hands.
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MARXISM, COMMUNISM, AND THE
STAGES-OF-GROWTH
This final chapter considers how the stages-of-growth analysis com-
pares with Marxism; for, in its essence, Marxism is also a theory
of how traditional societies came to build compound interest into
their structures by learning the tricks of modern industrial techno-
logy; and of the stages that will follow until they reach that ultimate
stage of affluence which, in Marx's view, was not Socialism, under the
dictatorship of the proletariat, but true Communism. As against
our stages-the traditional society; the preconditions; take-off;
maturity; and high mass-consumption-we are setting, then, Marx's
feudalism; bourgeois capitalism; Socialism; and Communism.
We shall proceed by first summarizing the essence of Marx's
propositions. We shall then note the similarities between his analysis
and the stages-of-growth; and the differences between the two
systems of thought, stage by stage. This will provide a way of
defining the status and meaning of Marxism, as seen from the per-
spective of the stages-of-growth sequence. Finally, we shall look
briefly at the evolution of Marxist thought and Communist policy,
from Lenin forward; and draw some conclusions.
THE SEVEN MARXIST PROPOSITIONS
Marxist thought can be summarized in seven propositions, as follows.
First, the political, social and cultural characteristics of societies
are a function of how the economic process is conducted. And,
basically, the political, social and cultural behaviour of men is a func-
tion of their economic interests. All that follows in Marx derives
from this proposition until the stage of Communism is reached,
when the burden of scarcity is to be lifted from men and their other
more humane motives and aspirations come to dominance.*
* The exact form of the function relating economic interest to non-economic beha-
viour varies in Marx's writings and in the subsequent Marxist literature. Much in the
original texts-and virtually all the operational conclusions derived from them-depend
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Second, history moves forward by a series of class struggles, in
which men assert their inevitably conflicting economic interests in
a setting of scarcity.
Third, feudal societies-in our phrase, traditional societies*-
were destroyed because they permitted to grow up within their
framework a middle class, whose economic interests depended on
the expansion of trade and modern manufactures; for this middle
class successfully contended against the traditional society and suc-
ceeded in imposing a new political, social, and cultural superstructure,
conducive to the pursuit of profit by those who commanded the new
modern means of production.
Fourth, similarly, capitalist industrial societies would, Marx pre-
dicted, create the conditions for their destruction because of two
inherent characteristics: because they created a mainly unskilled
working force, to which they continued to allocate only a minimum
survival real wage; and because the pursuit of profit would lead
to a progressive enlargement of industrial capacity, leading to a
competitive struggle for markets, since the purchasing power of
labour would be an inadequate source of demand for potential output.
Fifth, this innate contradiction of capitalism-relatively stagnant
real wages for labour and the build-up of pressure to find markets for ex-
panding capacity-would produce the following specific mechanism
on a simple and direct function relating economic interest to social and political beha-
viour. In some parts of the Marxist literature, however, the function is developed in a
more sophisticated form. Non-economic behaviour is seen as related not immediately
and directly to economic self-interest but to the ideology and loyalties of class. Since,
however, class interests and ideologies are presented as, essentially, a function of the
techniques of production and the social relationships arising from them, this indirect
formulation yields much the same results as the more primitive statement of connexion.
In the main stream of Marxist literature, from beginning to end, it is only in seeking,
protecting and enlarging property and income that men are really serious. Finally, there
are a few passages in Marx-and more in Engels-which reveal a perception that human
behaviour is affected by motives which need not be related to or converge with economic
self-interest. This perception, if systematically elaborated, would have altered radically
the whole flow of the Marxist argument and its conclusions. Marx, Engels, and their
successors have turned their backs on this perception, in ideological formulations;
although, as suggested later in this chapter, Lenin and his successors in Communist
politics have acted vigorously on this perception.
* Marx's concept of feudalism is too restrictive to cover all the traditional societies,
a number of which did not develop a class of nobility, linked to the Crown, owning
large tracts of land. Marxist analyses of traditional China, for example, have been strained
on this point.
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The seven Marxist propositions
of self-destruction: an increasingly self-conscious and assertive pro-
letariat goaded, at last, to seize the means of production in the face
of increasingly severe crises of unemployment. The seizure would be
made easier because, as the competition for markets mounted, in the
most mature stage of capitalism, monopolies would be formed; and
the setting for transfer of ownership to the State would be created.
Sixth-this is a Leninist extension of Marxism-the mechanism
of capitalism's downfall would consist not only in successive crises
of increasingly severe unemployment, but also in imperialist wars,
as the competition for trade and outlets for capital, induced by
markets inadequate to capacity, led on not only to monopolies but
also to a world-wide colonial struggle among the national monopolies
of the capitalist world. The working class would thus seize power
and install socialism not only in a setting of chronic, severe unemploy-
ment but also of disruption caused by imperialist wars, to which the
capitalist world would be driven in order to avoid unemployment
and to evade and divert the growing assertiveness of an increasingly
mobilized and class-conscious proletariat, led and educated by the
Communists within its ranks.
Seventh, once power is seized by the Socialist state, acting on
behalf of the industrial proletariat-in the phase called `the dictator-
ship of the proletariat'-production would be driven steadily forward,
without crises; and real income would expand to the point where
true Communism would become possible. This would happen because
Socialism would remove the inner contradictions of capitalism. Let
me quote Marx's vision of the end of the process : `In a higher phase
of Communist society, after the enslaving subordination of in-
dividuals under the division of labour, and therefore also the anti-
thesis between mental and physical labour has vanished; after labour,
from a mere means of life has of itself become the prime necessity of
life; after the productive resources have also increased with the all-
round development of the individual and all the springs of co-operative
wealth flow more abundantly-only then can the narrow horizon of the
bourgeois law be fully left behind and society inscribe on its banners :
from each according to his ability, to each according to his needs.'*
* Quoted from `Critique of the Gotha Programme', in J. Eaton, Political Economy,
a Marxist Textbook (London, 1958), P. 187.
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SIMILARITIES WITH STAGES-OF-GROWTH ANALYSIS
Now let us identify the broad similarities between Marx's historical
sequence and the stages-of-growth analysis.
First, they are both views of how whole societies evolve, seen
from an economic perspective; both are explorations of the problems
and consequences for whole societies of building compound interest
into their habits and institutions.
Second, both accept the fact that economic change has social,
political, and cultural consequences; although the stages-of-growth
rejects the notion that the economy as a sector of society-
and economic advantage as a human motive-are necessarily
dominant.
Third, both would accept the reality of group and class
interests in the political and social process, linked to interests
of economic advantage; although the stages-of-growth would
deny that they have been the unique determining force in the
progression from traditional societies to the stage of high mass-
consumption.
Fourth, both would accept the reality of economic interests in
helping determine the setting out of which certain wars arose;
although the stages-of-growth would deny the primacy of economic
interests and motives as an ultimate cause of war-making; and it
would relate economic factors and war in ways quite different from
those of Marx and Lenin.
Fifth, both would pose, in the end, the goal or the problem of
true affluence-of the time when, in Marx's good phrase-labour
`has of itself become the prime necessity of life'; although the
stages-of-growth has something more to say about the nature of
the choices available.
Sixth, in terms of economic technique, both are based on sectoral
analyses of the growth process; although Marx confined himself to
consumption goods and capital goods sectors, while the stages-of-
growth are rooted in a more disaggregated analysis of leading sectors
which flows from a dynamic theory of production.
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CENTRAL THEMES OF STAGES-OF-GROWTH
With these two catalogues as background we can now isolate more
precisely and more positively how the stages-of-growth analysis
attempts, stage by stage, to deal with and to solve the problems with
which Marx wrestled, and to avoid what appear to be Marx's basic
errors.
The first and most fundamental difference between the two
analyses lies in the view taken of human motivation. Marx's system
is, like classical economics, a set of more or less sophisticated logical
deductions from the notion of profit maximization, if profit maxi-
mization is extended to cover, loosely, economic advantage. The most
important analytic assertion in Marx's writings is the assertion in the
Communist Manifesto that capitalism `left no other nexus between
man and man than naked self-interest, than callous "cash payment"'.
In the stages-of-growth sequence man is viewed as a more com-
plex unit. He seeks, not merely economic advantage, but also power,
leisure, adventure, continuity of experience and security; he is
concerned with his family, the familiar values of his regional and
national culture, and a bit of fun down at the local. And beyond
these diverse homely attachments, man is also capable of being moved
by a sense of connexion with human beings everywhere, whom, he
recognizes, share his essentially paradoxical condition. In short,
net human behaviour is seen not as an act of maximization, but as
an act of balancing alternative and often conflicting human objectives
in the face of the range of choices men perceive to be open to them.
This notion of balance among alternatives perceived to be open is,
of course, more complex and difficult than a simple maximization pro-
position; and it does not lead to a series of rigid, inevitable stages of
history. It leads to patterns of choice made within the framework per-
mitted by the changing setting of society: a setting itself the product
both of objective real conditions and of the prior choices made by
men which help determine the current setting which men confront.*
* In the stages-of-growth some of the characteristics which have a persistent effect on
the whole sequence of growth are rooted in the traditional society and its culture. They
constitute an initial condition for the growth process with consequences for a time-period
which transcends the sweep from the preconditions forward. See the author's British
Economy of the Nineteenth Century (Oxford, 1948), chaptervi, especially pp. 1z8 n. and r?o.
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We shall not explore here the formal properties of such a dynamic
system; but it follows directly from this view of how individuals act
that the behaviour of societies is not uniquely determined by econo-
mic considerations. The sectors of a society interact: cultural, social,
and political forces, reflecting different facets of human beings, have
their own authentic, independent impact on the performance of
societies, including their economic performance. Thus, the policy
of nations and the total performance of societies-like the behaviour
of individuals-represent acts of balance rather than a simple
maximization procedure.
On this view it matters greatly how societies go about making
their choices and balances. Specifically, it follows that the central
phenomenon of the world of post-traditional societies is not the
economy-and whether it is capitalist or not-it is the total pro-
cedure by which choices are made. The stages-of-growth would
reject as inaccurate Marx's powerful but over-simplified assumption
that a society's decisions are simply a function of who owns property.
For example, what Marx regards as capitalist societies at no stage,
even in their purest form, ever made all their major decisions simply
in terms of the free-market mechanism and private advantage. In
Britain, for example, even at the height of the drive to maturity-
in let us say the 1815-50 period, when the power of the industrial
capitalist was least dilute-in these years factory legislation was set
in motion; and after the vote was extended in the Second and Third
Reform Bills, the policy of the society was determined by a balance
between interests of profit and relative utility maximization on the
one hand, and, on the other, interests of welfare as made effective
on a `one man one vote' basis through the political process. Capital-
ism, which is the centre of Marx's account of the post-feudal phase,
is thus an inadequate analytic basis to account for the performance
of Western societies. One must look directly at the full mechanism
of choice among alternative policies, including the political process-
and, indeed, the social and religious processes-as independent
arenas for making decisions and choices.
To be more concrete, nothing in Marx's analysis can explain how
and why the landed interests in the end accepted the Reform Bill
of 1832, or why the capitalists accepted the progressive income tax,
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or the welfare state; for it is absolutely essential to Marxism that it
is over property that men fight and die. In fact one must explain such
phenomena with reference to a sense of commitment to the national
community and to the principles of the individualist-utilitarian
creed that transcended mere profit advantage. Similarly, nothing
in Marx's analysis explains the patient acceptance of the frame-
work of private capitalism by the working class, when joined to the
democratic political process, despite continued disparities in income.
Marx-and Hegel-were correct in asserting that history moves
forward by the clash of conflicting interests and outlooks; but the
outcome of conflict in a regularly growing society is likely to be
governed by ultimate considerations of communal continuity which
a Boston lawyer, Charles Curtis-old in the ways of advocacy and
compromise-recently put as follows:
I suggest [he said] that things get done gradually only between opposing
forces. There is no such thing as self-restraint in people. What looks like
it is indecision....It may be that truth is best sought in the market of
free speech, but the best decisions are neither bought nor sold. They are
the result of disagreement, where the last word is not `I admit you're
right', but `I've got to live with the son of a bitch, haven't I'.*
This ultimate human solvent, Karl Marx-a lonely man, profoundly
isolated from his fellows-never understood. He regarded it, in
fact, as cowardice and betrayal, not the minimum condition for
organized social life, any time, anywhere.
And, as developed in chapter 8, a simple analysis of war, in terms
of economic advantage, breaks down in the face of a consideration
of the different types of armed conflict and how they actually came
about. Nationalism-and all that goes with it in terms of human
sentiment and public policy-is a hangover from the world of tradi-
tional societies. t
* C. Curtis, A Commonplace Book (New York, 1957), pp. 112-13.
f This theme is developed by Schumpeter in his writings about Marx and in his essay
on Imperialism (J. Schumpeter, Imperialism (ed. B. Hoselitz, Meridian Books, New
York, 1945), especially pp. 64ff.; and Ten Great Economists (London, 1952), especially
pp. zo and 61 ff.). Whereas Schumpeter emphasized the persistence of irrational and
romantic nationalist attitudes, the present analysis would underline two other factors.
First, the role of certain groups and attitudes derived from the traditional society, in the
growth process itself. Second, the structural fact that, once national sovereignty was
accepted as a rule of the world arena, nations found themselves gripped in an almost
inescapable oligopolistic struggle for power which did have elements of rationality.
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One need look no farther than the primacy colonial peoples give
to independence over economic development, or the hot emotions
Arab politicians can generate in the street crowds, to know that
economic advantage is an insufficient basis for explaining political
behaviour; and all of modern history sustains the view that what
we now see about us in Asia, the Middle East, and Africa is typical
of human experience, when confronted with the choices faced in
transitional societies.
Thus, the account of the break-up of traditional societies offered
here is based on the convergence of motives of private profit in the
modern sectors with a new sense of affronted nationhood. And other
forces play their part as well, for example the simple perception
that children need not die so young or live their lives in illiteracy:
a sense of enlarged human horizons, independent of both profit and
national dignity. And when independence or modern nationhood
are at last attained, there is no simple, automatic switch to a domi-
nance of the profit motive and economic and social progress. On
the contrary there is a searching choice and problem of balance
among the three directions policy might go: external assertion; the
further concentration of power in the centre as opposed to the regions;
and economic growth.
Then, indeed, when these choices are at last sorted out, and pro-
gress has gripped the society, history has decreed generally a long
phase when economic growth is the dominant but not exclusive
activity: the take-off and the sixty years or so of extending modern
techniques. It is in the drive to maturity that societies have behaved
in the most Marxist way, but each in terms of its own culture,
social structure and political process; for growing societies, even
growing capitalist societies, have differed radically in these respects.
There has been no uniform `superstructure' in growing societies.
On the contrary, the differing nature of the `superstructures' has
strongly affected the patterns which economic growth assumed.
And even in the drive to maturity we must be careful not to identify
what was done-the energetic extension of modern technique-
with a too-simple hypothesis about human motivation. We know
that during take-offs and during the drive to maturity societies did,
in fact, tend substantially to set aside other objectives and clear
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the way for activities which would, within human and resource
and other societal restraints, maximize the rate of growth. But
this is not to say that the profit motive itself was dominant. It
certainly played a part. But in the United States after the Civil
War, for example (perhaps the most materialist phase of any capital-
ist society, superficially examined), men did the things necessary to
industrialize a great, rich continent, not merely to make money,
but because power, adventure, challenge, and social prestige were
all to be found in the market-place of a society where Church and
State were relatively unimportant. The game of expansion and
money-making was rewarding at this stage, not merely in terms of
money, but in terms of the full range of human motives and aspira-
tions. How, otherwise, can one explain the ardent striving of men
long after they made more money than they or their children could
conceivably use? And similar modifications in the Marxist view of
human motivation would be required in an accurate account of the
German, Japanese, Swedish, French, British, and-indeed-the
Russian drives to maturity.
At this stage we come, of course, to Marx's familiar technical
errors: his implicit Malthusian theory of population, and his theory
of stagnant real wages.
It is an old game to point out that, in fact, population did not so
move as to maintain a reserve army of unemployed, and that the
workings of competitive capitalism yielded not stagnant real wages
but rising real wages. Robinson and Kaldor have recently, for
example, emphasized these deep flaws in Marx's economics.* And
indeed they are, in formal terms, quite technical errors in judging
how the economic process would operate. But they are more. They
directly reflect Marx's basic proposition about societies; for neither
political power, social power, nor, even, economic power neatly
followed the fact that property was privately owned. Competition
did not give way to monopoly; and competition, even imperfect,
permitted wages to approximate net marginal value product; and
this technical aspect of the market mechanism was buttressed by
an acceptance of trade unions by the society and by a growing set
* Joan Robinson, Marx, Marshall, and Keynes (Delhi, 1955); and N. Kaldor, `A Model
of Economic Growth', Economic journal, December 1957, especially pp. 618-21.
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of political interventions allowed and encouraged by the democratic
political process. Moreover, the fact of mass progress itself, ruled
out in Marx's analysis, made men rethink the calculus of having
children; and it yielded a non-Malthusian check on the birth-rate:
a check based not on poverty and disease but on progress itself.
Think here not only of the older cases of declining birth-rates in
history but of the radical fall in the birth-rate in resurgent Japan
and Italy of the 1950's.
And so, when compound interest took hold, progress was shared
between capital and labour; the struggle between classes was softened;
and when maturity was reached they did not face a cataclysmic
impasse. They faced, merely, a new set of choices; that is, the
balance between the welfare state; high mass-consumption; and a
surge of assertiveness on the world scene.
Thus, compound interest and the choices it progressively opened
up by raising the average level of real income becomes a major
independent variable in the stages-of-growth; whereas, in Marx's
theory, compound interest appears in the perverse form of mount-
ing profits, capable only of being distributed in high capitalist living,
unusable capacity, and war. Put another way, the income-elasticity
of demand is a living force in the stages-of-growth analysis; whereas
it is virtually ruled out in Marx's powerful simplifications.
Now the Leninist question: whether capitalism, having an alleged
built-in tendency for profits to decline, causes monopolies to rise,
and crises to become progressively more severe, and leads to a
desperate competitive international struggle for markets, and to
wars.
First, the question of industrial concentration. Here we would
merely assert that the evidence in the United States,. at least, in no
way suggests that the degree of concentration has increased signifi-
cantly in, say, the last fifty years. And where it has increased it has
done so more on the basis of the economies of large-scale research
and development than because the market environment has been
too weak to sustain small firms. And I doubt that the story would
be very different in other mature societies of the West. Moreover,
where concentrations of economic power have persisted, they have
been forced to operate increasingly on terms set by the political
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process rather than merely the maximization procedures of the
market-place itself.
Second, the question of increasingly severe crises. Down to 1914
there is no evidence whatsoever that the amplitude of cycles in
unemployment increased. On the contrary, the evidence is of a
remarkable uniformity in the cycles of the nineteenth century,
whether viewed in terms of such statistics of unemployment as we
have, or in terms of years of increasing and decreasing economic
activity. There was, of course, the unique depression of the 1930's.
But, if the view developed in chapter 6 is correct, the relative inter-
war stagnation in Western Europe was due not to long-run diminish-
ing returns but to the failure of Western Europe to create a setting
in which its national societies moved promptly into the age of high
mass-consumption, yielding new leading sectors. And this failure,
in turn, was due mainly to a failure to create initial full employment
in the post-1920 setting of the terms of trade. Similarly the pro-
tracted depression of the United States in the 1930's was due not
to long-run diminishing returns, but to a failure to create an initial
renewed setting of full employment, through public policy, which
would have permitted the new leading sectors of suburban housing,
the diffusion of automobiles, durable consumers' goods and services
to roll forward beyond 1929.
There is every reason to believe, looking at the sensitivity of the
political process to even small pockets of unemployment in modern
democratic societies, that the sluggish and timid policies of the
1920's and 1930's with respect to the level of employment will no
longer be tolerated in Western societies. And now the technical
tricks of that trade-due to the Keynesian revolution-are widely
understood. It should not be forgotten that Keynes set himself the
task of defeating Marx's prognosis about the course of unemployment
under capitalism; and he largely succeeded.
As for that old classical devil `diminishing returns'-which Marx
took over in the form of his assumption of the declining level of
profits-we cannot be dogmatic over the very long run; but the
scale and pace of scientific enterprise in the modern world (which, as
a sector, is at a rapid growth-stage) make it unlikely that we will
lack things to do productively if people prefer productive activity
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to leisure. Besides, societies have it open to them, if they wish to
continue the strenuous life, to follow the American lead and re-
impose a Malthusian surge of population, when they get bored with
gadgets.
Finally, the question of mature capitalism's dependence on colo-
nies. Here we need only note that, while colonialism is virtually
dead, capitalism in the Western Hemisphere, Western Europe and
Japan is enjoying an extraordinary surge of growth. It is perfectly
evident that, whatever the economic troubles of the capitalist
societies, they do not stem primarily from a dependence on imperial-
ism. If anything, their vulnerability now derives from an unwilling-
ness to concern themselves sufficiently with-and to allocate adequate
resources to-the world of underdeveloped nations. Domestic
demand is not so inadequate as to force attention outward : it is too
strong to make it possible for governments to mobilize adequate
resources for external affairs. The current hope of Communism
lies not in the exploitation of confusion and crises brought on by
a compulsive struggle to unload exports, but from an excessive
absorption of the capitalist world with the attractions of domestic
markets.
This brings us to a comparison between Marx's view of Commun-
ism and the stage beyond mass consumption in the stages-of-growth.
On this issue Marx was a nineteenth-century romantic. He looked
to men, having overcome scarcity, permitting their better natures
to flower; to work for the joy of personal expression in a setting
where affluence had removed the need and temptation for avarice.
This is indeed a decent and legitimate hope; an aspiration; and,
even, a possibility. But, as suggested towards the end of chapter 6,
it is not the only alternative. There are babies and boredom, the
development of new inner human frontiers, outer space and trivial
pleasures-or, maybe, destruction, if the devil makes work for idle
hands. But while this is man's ultimate economic problem, if all
goes well, it is a problem that we of this generation can set aside,
to a degree, given the agenda that faces us in a world of nuclear
weapons and in the face of the task of making a peaceful world
community that will embrace the older and newer nations which
have learned the tricks of growth.
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MARX IN PERSPECTIVE
What can we say about Marx, then, in the light of the stages-of-
growth analysis? Where does he fit?
Intellectually he brought together two sets of tools : an Hegelian
view of the dynamics of history, and a generalized version of profit
maximization (as well as various substantive propositions) from the
world of the classical economists.
He applied this kit-bag to what he could perceive of one historical
case : the case of the British take-off and drive to maturity; and he
generalized and projected his result. His whole system was fully
formed by 1848, when he and Engels wrote the Communist Manifesto;
that is, it was formed before any other society except Britain had
experienced the take-off. And although Marx commented ad hoc
over the years on various short-run aspects of the French, German,
and American cases-and was personally involved in the political
events of France and Germany-it was the British Industrial Revo-
lution and what followed the take-off in Britain that shaped his
categories. Nothing really important in Marx post-dates 1848.
Now, as we have seen, the British case of transition was unique
in the sense that it appeared to have been brought about by the
internal dynamics of a single society, without external intervention;
that is, there grew up within an agricultural and trading society an
industrial middle class, which progressively transformed the politics,
social structure, and values of the society, notably in the three
decades after Waterloo. The French, German and American cases
were not distinctive enough, at least in Marx's time, and within his
understanding, to force him to revise his categories; Japan he did
not study or incorporate in his system; Russia made him shudder,
at least until late in life, when the Russian intellectuals began to
take him seriously; and, like the parochial intellectual of Western
Europe he was, the prospects in Asia and Africa were mainly beyond
his ken, dealt with almost wholly in the context of British policy
rather than in terms of their own problems of modernization.*
* I. Berlin, Karl Marx (London, 1956 edition), pp. 254-8. Marx did, however, make
some interesting ad hoc observations on India and China, in writing as a journalist about
British policy in the Opium Wars and the Indian Mutiny.
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A concentration on the British case permitted a much simpler
concept of the transition period and of the take-off than our con-
temporary range of historical knowledge would allow. Marx, general-
izing his insights about Britain, could stick with the middle class
and the profit motive. The role of reactive nationalism in transform-
ing a traditional society and the problem of choice faced when a
modern independent state was created could be ignored.
In short, Marx belongs among the whole range of men of the
West, who, in different ways, reacted against the social and human
costs of the drive to maturity and sought a better and more humane
balance in society. Driven on-in his father's phrase-by a `de-
monic egoism','* by an identification with the underdog and a hatred
of those who were top-dog, but also disciplined to a degree by a
passion to be `scientific' rather than sentimental, Marx created
his remarkable system: a system full of flaws but full also of legiti-
mate partial insights, a great formal contribution to social science,
a monstrous guide to public policy.
One failure of Marx's system began to be revealed before he died;
and he did not know how to cope with it. Some believe that his
inner recognition of this failure is responsible for the fact that Das
Kapital is an unfinished book. The failure took the form of the
rise in industrial real wages in Western Europe and the perfectly
apparent fact that the British and Western European working classes
were inclined to accept ameliorative improvements; accept the terms
of democratic capitalism rather than concentrate their efforts on
the ultimate bloody show-down, the seizure of property and its
turn-over to a State which somehow, in Marx's view, the workers
might then control. The First International which he formed and
led disintegrated in the early 1870's, the union leaders turning their
backs on Marx and seeking gradual reform within their own societies.
And so Marx-and Engels too-ended with a somewhat disabused
view of the industrial worker on whom they counted so much to
make their dialectic come true: the worker was content with a bit of
fairly regular progress; a sense that things were getting better for
himself and his children; a sense that, by and large, he was getting
a fair share from the lay-out of society as a whole; a willingness
* C. J. S. Sprigge, Karl Marx (London, 1938), p. 27.
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Marx in perspective
to fight for what he wanted within the rules of political democracy,
under a regime of private property ownership; a tendency to identify
himself with his national society rather than with the abstract world
of allegedly down-trodden industrial workers everywhere; a willing-
ness, despite conflict and inequity, to live with his fellow-men
rather than to conspire to kill them. And that is where the story
of Lenin and modern Communism begins.
THE EVOLUTION OF MODERN COMMUNISM
For modern Communism has been built directly on an effort to
deal with the problems which Marx did not solve or solved incor-
rectly, both as a theorist and as a practising revolutionary politician.
Modern Communism is shaped, in a quite concrete way, by Marx's
errors and failures. Lenin had to deal with a world of workers as
they were; and of peasants, whom Marx regarded as cloddish, and
set aside in a few perfunctory phrases; a world where competitive
nationalism was a powerful force; and a world at war. Marx dis-
banded the First International rather than wrestle with reality;
Lenin stayed in the game of politics and power as he found it.
How did Lenin proceed? His first and most fundamental decision
was to pursue political power despite the fact that the majority of
the Russian industrial working class was unwilling to support a
revolutionary attempt to seize power. Lenin's pamphlet, What is
to be Done? published in 19o2, is the true origin of modern Commu-
nism. He asserted there that if the Russian workers were unprepared
to fulfil their historic Marxist destiny-as they evidently were-
the Communist Party would make them fulfil that destiny. The
Communist Party would not work as a fraction of the Socialist
movement, as the Communist Manifesto counselled. It would form
itself as a separate party, a conspiratorial elite, and seek power on
a minority basis, in the name of the proletariat, `swimming against
the stream of history'.
Lenin decided, in short, to fulfil Marx's prophecy despite the
failure of Marx's prediction. From the beginning to the present-
from the pre-1914 split of the Socialist movement in Russia to the
stand in 1956 of the Budapest workers and Moscow's continued
unwillingness to contemplate free elections even in societies where
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Marxism, Communism, and the stages-of-growth
the capitalist and large landowner are fully liquidated-this is the
dead rat at the bottom of Communist thought and practice: the
industrial worker has not thought and behaved as, in theory, he
should.
Lenin's second decision followed directly from the first; and that
was to seize power in Russia, in the confusion following the March
1917 revolution, even though by Marxist standards backward Russia
was historically `unripe' for Socialism. For a little while, the truer
Marxists in Lenin's camp comforted themselves with the hope that
Germany-an historically `ripe' society-would also go Communist,
after the First World War, and thus create a whole Communist area
within which Russian historical backwardness could be `subsumed.
But that hope was lost; and Lenin proceeded on the basis of
Communism in one country well before Stalin created the phrase.
Third, in the Kronstadt Revolt of March 1921, Lenin confirmed
the pattern of 1902 and November 1917 by using force to repress
the revolt of a probable majority within the Communist Party,
a majority which opposed the rapid emergence of a dictatorial state
apparatus. Lenin decided, after some soul-searching, to continue
to rule on the basis of a police-state dictatorship.
Fourth, in the 1930's, Stalin, having cheerfully accepted the police-
state dictatorship as the basis for rule, radically altered the tone of
the society by introducing powerful material incentives for those
willing to work effectively within the orbit of the Communist state
and by supplementing Communist ideology with strong elements
of Great Russian nationalism, yielding revisions in everything from
soldier's uniform to the content of history books, primary education,
and the approved pattern of family life.
Fifth, in the 19th Party Congress of October 1952, but more
clearly after Stalin's death, the direction of Communist expansion
was turned away from the advanced countries to the underdeveloped
areas, following Lenin's prescription and, indeed, his practice. In
effect, Marx's judgment about the sequence of history, and the
inevitable passage of mature capitalist societies to Socialism, was
abandoned in favour of the Leninist formula, which remains
Khrushchev's guide in theory and in fact.
What has emerged, then, is a system of modern state organization
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The evolution of modern Communism
based not on economic determinism, but on political or power
determinism. It is not the ownership of the means of production
that decides everything, it is the control of the army, the police,
the courts, and the means of communication. Lenin and his succes-
sors have, in effect, turned Hegel back on his feet; and they have
inverted Marx. Economic determinism did not work well for them;
but power determinism has, quite well, filled the gap. They have
operated on the perception that, under certain circumstances, a
purposeful well-disciplined minority can seize political power in
a confused ill-organized society; once power is seized, it can be
held with economy of force, if the Communist elite maintains its
unity; and with power held, the resources of a society may be
organized in such a way as to make the economy grow along lines
which consolidate and enlarge the power of the Communist elite.
The irony in this story even extends to the nature of political
economy under Communism. In the history of modern Russia,
and in post-1945 Eastern Europe and Communist China as well,
one can find a quite good approximation to Marx's inaccurate
description of how the capitalist economy would work: wages are held
as near the iron minimum as the need for incentives permits; profits
are ploughed back into investment and military outlays on a large
scale; and the system is so structured that it would be fundamentally
endangered if the vast capacity that results were to be turned whole-
heartedly to the task of raising real wages. The difference between
Marx's image of capitalism and Communist political economy is, of
course, that the motive in the one case was to have been private profit;
in the other it is the maintenance and extension of the elite's power.
Similarly, the political dictatorship of the elite over the majority,
operating in terms of its own interests, is a fair approximation of
what Marx believed to be the political conformation of capitalism,
where those with property ruled; but Marx's automatic linking of
property-ownership and political power left a certain gap in the
mechanism of how power was exercised.* And this gap the Com-
* As Berlin points out (op. cit. p. 108), Bakunin perceived that, at bottom, Marx
was `a fanatical state-worshipper'; and his whole performance as a revolutionary politi-
cian, with its compulsion to exercise power personally or not at all, suggests that, in
similar circumstances, he would have bridged this theoretical gap, much as Lenin did;
although Marx clearly lacked Lenin's tactical gifts.
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Marxism, Communism, and the stages-of-growth
munists had to fill with the secret police, and the whole system of
constraints and incentives which permit them to rule and to get
the performance they want from those whom they control.
But this inversion of Marx in Marx's name also has its problems
and dilemmas. While power can be held with economy of force,
nationalism in Eastern Europe cannot be defeated; and, within
Russia, Stalin's tactical evocation of nationalism in the 193o's and
1940's, steadily gathering force, has set up important cross-strains.
Similarly, while output can be increased by Communist tech-
niques, the movement to technological maturity creates aspirations
and levels of intellectual sophistication which also set up important
cross-strains.
Moreover, the Buddenbrooks' dynamics moves on, generation by
generation; those who seized power and used it to build an industrial
machine of great resource may be succeeded by men who, if that
machine cannot produce a decisive international result, decide that
there are other and better objectives to be sought, both at home and
abroad.
In short, while Lenin and Stalin-and now Mao-have succeeded
in overcoming the weaknesses in Marx's analysis of the historical
process, it does not follow that their techniques will prove to have
long-run viability. Both Marxism and modern Communism are
conceptions which set transcendent goals, independent of the tech-
niques used to achieve them; but the long lesson of history is that
the ends actually achieved are largely a function of the means used
to pursue them.
COMMUNISM: A DISEASE OF THE TRANSITION
On the other hand, Communism as it is-a great fact of history-
cannot be disposed of merely by revealing its nature, its deceptions,
and its dilemmas. To identify the errors in Marxism and to demon-
strate the un-Marxist character of Communism is not a very impor-
tant achievement. The fact is that Communism as a technique of
power is a formidable force. Although it was an un-Marxist insight,
it was a correct insight of Lenin's that power could, under certain
circumstances, be seized and held by a purposeful minority prepared
to use a secret police. Although it was an un-Marxist insight, it was
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Communism: a disease of the transition
a correct insight that societies in the transition from traditional to
modern status are peculiarly vulnerable to such a seizure of power.
It is here, in fact, that Communism is likely to find its place in
history. Recall again the analysis of chapter 3, where the pre-
conditions period is considered : a situation in which the society has
acquired a considerable stock of social overhead capital and modern
know-how, but is bedevilled not merely by the conflict between the
residual traditional elements and those who would modernize its
structure, but bedevilled as well by conflicts among those who would
move forward, but who cannot decide which of the three roads to
take, and who lack the coherence and organization to move decisively
forward in any sustained direction.
It is in such a setting of political and social confusion, before
the take-off is achieved and consolidated politically and socially as
well as economically, that the seizure of power by Communist con-
spiracy is easiest; and it is in such a setting that a centralized dictator-
ship may supply an essential technical precondition for take-off and
a sustained drive to maturity: an effective modern state organization.
Remember, for example, what it was in Communism that attracted
the Chinese intellectuals after the First World War. It was not its
Marxist strain; for the Chinese Communists were-and have re-
mained-indifferent Marxists. It was not the Communist economic
performance; for the Russian economy was in poor shape in the early
1920's. The Chinese intellectuals were drawn by Lenin's technique
of organization as a means to unify and control a vast, deeply divided
country. Both the Kuomintang and the Chinese Communists set
themselves up on the Leninist model; and this was understandable
in a transitional nation without an effective central government,
dominated, in fact, by regional warlords. (Incidentally, if the First
World War had not occurred-or had occurred a decade later-Russia
would almost certainly have made a successful transition to moderni-
zation and rendered itself invulnerable to Communism. Communism
gripped Russia very nearly at the end of the phase when it was likely
to be vulnerable to the kind of crisis which confronted it in 1917.)
Communism is by no means the only form of effective state
organization that can consolidate the preconditions in the transition
of a traditional society, launch a take-off, and drive a society to
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Marxism, Communism, and the stages-of-growth
technological maturity. But it may be one way in which this difficult
job can be done, if-and this still remains to be seen-if it can
solve the problem of agricultural output in the take-off decades.
Communism takes its place, then, beside the regime of the Meiji
Restoration in Japan, and Ataturk's Turkey, for example, as one
peculiarly inhumane form of political organization capable of
launching and sustaining the growth process in societies where the
preconditions period did not yield a substantial and enterprising
commercial middle class and an adequate political consensus among
the leaders of the society. It is a kind of disease which can befall
a transitional society if it fails to organize effectively those elements
within it which are prepared to get on with the job of modernization.
For those who would prefer to see the aspiring societies of the
world not follow this particular road to modernization-in Asia,
the Middle East, Africa, and Latin America-the Communist
technique for mobilizing power and resources poses a formidable
problem, almost certainly what historians will judge the central
challenge of our time; that is, the challenge of creating, in association
with the non-Communist politicians and peoples of the preconditions
and early take-off areas, a partnership which will see them through
into sustained growth on a political and social basis which keeps
open the possibilities of progressive, democratic development.
A STATEMENT OF VALUES
Why is it that we want this result? What is it in our view of men and of
life that reacts equallyagainst Marx's economic determinism and Com-
munism's Hegelian power determinism, its insistence that the correct
judgment of history by the Communist elite justifies any use of power
that elite judges necessary to fulfil history's laws or its own interests?
The answer lies in the nature of how we define good and evil.
A colleague of mine, Professor Elting Morison of M.I.T., speaking
in another context, recently said :*
My own view of evil is this: it consists of the effort to maintain a particular
end-for reasons of order, logic, aesthetics, decency, for any reason at all
-by means that deny men the opportunity to take into account the
inevitable alternatives posed by the diversity and paradox in their own
* E. E. Morison (ed.), The American Style, New York, 1958, P. 321-
164
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A statement of values
natures. The ends may be perverted-as to put Deutschland over all; or
ideal-as to make men noble; the means may be base-as with rack, pinion,
or castor oil; or benign-as to withhold from children the fact that gods
got drunk and told ribald anecdotes on Olympus-it makes no difference.
This [Morison goes on] is no original view. For our civilization, we
have agreed it was most memorably stated in the New Testament-with
its intense concern for the relationship of a man to himself and the next
man to him, with its distrust of logical system and uniform solutions, its
parables radiating off their ambiguous meanings, its biting conflicting
admonitions, and its insistence that wisdom is only wise if, as situations
change, what is wise also changes. Such a view of things appears to have
been in the minds of those who invented democracy-which is a method
that in its looseness and disorder permits conflicting urges to work
themselves out, and the ends of paradox to be held in tolerable but
changing resolution. It does not prefigure the ends or final results. It
awaits the arrival of the new occasions before supplying the new duties.
Something like Morison's statement of creed lies at the heart of
all the Western societies. More than that, there is no major culture
-including the Russian and Chinese-which does not, in its own
way, make allowance for the uniqueness and diversity of men, and
provide, in its structure and canons, for balance and for private
areas of retreat and expression.
Morison's statement of the democratic creed can easily be trans-
lated into the terms of other cultures: it is, broadly speaking, what
most human beings would choose, if the choice were theirs.
But societies must do more than have a creed. They must solve
their problems. Democracy itself, when it works, is an extraordinary
exercise in balance between imposed discipline, self-discipline, and
private expression. If we and our children are to live in a setting
where something like the democratic creed is the basis of organiza-
tion for most societies, including our own, the problems of the tran-
sition from traditional to modern status in Asia, the Middle East,
and Africa-the problems posed by the creation of the preconditions
and the take-off-must be solved by means which leave open the
possibility of such a humane, balanced evolution.
It is here, then, that in 1959, writing in the democratic north,
the analysis of the stages-of-growth comes to an end: not with the
age of affluence; not with the automobile and hire purchase; not with
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Marxism, Communism, and the stages-of-growth
the problem of secular spiritual stagnation; not even with the United
States and its vast baby crop; but with the dilemmas and worries of
the men in Djakarta, Rangoon, New Delhi, and Karachi; the men
in Tehran, Baghdad, and Cairo; the men south of the desert too,
in Accra, Lagos, and Salisbury. For the fate of those of us who now
live in the stage of high mass-consumption is going to be substan-
tially determined by the nature of the preconditions process and
the take-off in distant nations, processes which our societies experi-
enced well over a century ago, in less searching and difficult forms.
It will take an act of creative imagination to understand what is
going forward in these decisive parts of the world; and to decide
what it is that we can and should do to play a useful part in those
distant processes. We would hope that the stages-of-growth analysis,
compressing and making a kind of loose order of modern historical
experience, may contribute a degree of insight into matters which
must of their nature be vicarious for us. We would hope, too, that
a knowledge of the many diverse societies which have, in different
ways, organized themselves for growth without suppressing the
possibility of human freedom, will give us heart to go forward
with confidence. For in the end the lesson of all this is that the
tricks of growth are not all that difficult; they may seem so, at
moments of frustration and confusion in transitional societies; and
they seemed so when our own societies got stuck between maturity
and high mass-consumption, as they did between the wars.
But on one point Marx was right-and we share his view: the
end of all this is not compound interest for ever; it is the adventure
of seeing what man can and will do when the pressure of scarcity is
substantially lifted from him.
We should take economics seriously-but not too seriously-
recalling always Keynes's toast before the Royal Economic Society
in 1945: `I give you', he said, `the toast of the Royal Economic
Society, of economics and economists, who are the trustees not of
civilization, but of the possibility of civilization.' And we should bear
this admonition in mind not only as an injunction to hasten the day
when all can share the choices open in the stage of high mass-
consumption and beyond; but in the process of moving to that stage.
Billions of human beings must live in the world, if we preserve it,
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A statement of values
over the century or so until the age of high mass-consumption
becomes universal. They have the right to live their time in civilized
settings, marked by a degree of respect for their uniqueness and
their dignity, marked by policies of balance in their societies, not
merely a compulsive obsession with statistics of production, and
with conformity to public goals defined by a co-optive elite. Man
is a pluralistic being-a complex household, not a maximizing unit-
and he has the right to live in a pluralistic society.
Moreover, as an hypothesis of social science and a statement of
faith, the goals we achieve in history cannot be separated from the
means we use to achieve them. There may not be much civilization
left to save unless we of the democratic north face and deal with
the challenge implicit in the stages-of-growth, as they now stand
in the world, at the full stretch of our moral commitment, our
energy, and our resources.
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THE DIFFUSION OF THE
PRIVATE AUTOMOBILE
NOTES TO TABLE 8
The following sources are referred to below by abbreviated titles:
A.F. and F. = Automobile Facts and Figures 1958, Automobile Manufacturers Asso-
Handbuch
Jahrbuch
U.N.S.Y.
ciation (Detroit, 1958).
= Statistisches Handbuch der Weltwirtschaft (Berlin, 1936).
= Statistisches Jahrbuch fur die Bundesrepublik Deutschland, 1953-8.
= United Nations Statistical Yearbook.
UNITED STATES
Scope: The figures include taxis.
Sources: 1940-5, Historical Statistics of the United States 1789-x945 (1949);
1946-57, Statistical Abstract of the United States.
1958, A.F. and F. (adjusted).
CANADA-including Newfoundland from 1949
Scope: The figures include commercial vehicles until Ig25. The number of commercial
vehicles then was 42,000. Taxis are included from 1931; there were 8,ooo in 1930.
Sources: 5904-56, Canada Yearbook.
1957, U.N.S.Y.
FRANCE (including Alsace-Lorraine from 1921)
Scope: The figures include commercial vans of under 1-ton capacity, except
1951 to 5953.
Sources: 1904-1o, 1914-33, Annuaire Statistique de la France, 1936.
1913, Handbuch; 1934-36, Jahrbuch.
1937-56, U.N.S.Y.
1957, A.F. and F.
GREAT BRITAIN
Scope: The figures for 1904-20 include Ireland. In 1921 there were 4,000 private
automobiles in Northern Ireland.
Dates: 1904-20, 31 March; 1921, highest Quarter; 1922-34, 1939-45, 31 August;
1935-8, 1946-58, September Quarter.
Sources: 1904-21, Motor Industry of Great Britain, 1947 (Society of Motor Manufac-
turers, 5947).
1922-34, Statistical Abstract for the United Kingdom.
1935-57, Annual Abstract of Statistics.
1958, Monthly Digest of Statistics.
GERMANY
Scope: 1913-38, figures are for Germany within its various frontiers, but excluding
Austria in 1938. The figures include buses (28,ooo in 1938).
1939-57, figures are for the area of the Bundesrepublik, excluding the Saar and West
Berlin.
Before 1954, dual-purpose vehicles were not separately distinguished. From 1954,
when there were 33,000 dual-purpose vehicles, they are included with private cars.
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Appendix
GERMANY (cont.)
Sources: 1913-36, Handbuch.
1937-8, Statistisches Jahrbuch fur dos Deutsche Reich.
1939-58, Jahrbuch.
ITALY
Scope: The figures include taxis.
Sources: 1913, Handbuch.
1911-12, 1914-57, Annuario Statistico Italiano, 1953-8.
JAPAN
Scope: The series are especially discontinuous because no single source was available,
and because Japanese motor vehicles are not easy to classify. Motor-rickshaws are
excluded until 1929. Midget cars, of which there were over half a million in 1955, are
excluded throughout. The major discontinuity is between 1935 and 1937. On the
1935 basis the 1937-8 figures of 6o and 59 thousand would perhaps have been
100-105 thousand.
Dates: 1913, 1920-25, 31 March; 1916-19, 1926-30, December; 1931-3, August;
1934-5, October; 1937-57, December.
Sources: 1913, 1920-25, Handbuch.
1915-19, Annuaire Statistique de la France, r936.
1926-30, League of Nations Statistical Yearbook.
1931-35, Mitsubishi Economic Research Unit: Japanese Trade and Industry (London,
1936).
1937-56, U.N.S.Y.
1957, A.F. and F. (adjusted).
RussIA
Scope: From 1946 the figures are guesses, apparently originating from American Auto-
mobile.
Dates: 1924-8, 1931-2, 1 January; 1929-30, October; 1933-41, December.
Sources: 1913-32, Handbuch.
1933-6, Motor Industry of Great Britain.
1937-42, Automobile Facts and Figures, American Automobile Manufacturers
Association, Detroit.
1946-57,Jahrbuch.
NOTES TO TABLE 9
1. For scope of the automobile licensing figures, see Notes to Table 8.
z. Where the dates to which the licensing figures relate have varied, the population
figures used have been adjusted for this. Where the licensing dates used are consistent,
mid-year populations have been used throughout.
3. The sources for the population figures are generally the same as for the licensing
figures. The 1913-38 figures for Japan are from K. Ohkawa, The Growth Rate of the
Japanese Economy Since r878 (Tokyo, 1947)., Figures for post-war years are generally
from United Nations Demographic Yearbook.
4. Wartime population figures are seldom comparable with those for normal periods,
which are usually de facto or approximately de facto; and ratios of automobiles to
population signify very little in wartime. Thus ratios are, in general, not indicated for
the years in which a country was involved in one of the World Wars.
5. Some of the figures used for France, Germany, Japan and Russia in recent years,
and for Italy and Japan before 1920, have been added or revised since the charts were
drawn.
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Appendix
TABLE 8. Private automobiles in use in certain countries, [goo -58
(Thousands)
United
Great Ger-
Year
States
Canada
France Britain many
Italy
Japan Russia
I
oo
8
g
x901
15
3
.
1902
23
.
1903
33
.
1904
55
1
8
1905
6
77
6
1
22
16
190
1907
Io
140
1
2
23
32
1908
194
3
41
.
1909
306
5
48
.
1910
458
9
54
53
?
1911
619
22
72
14
1912
902
36
88
17
1913
1,19o
54
91
1o6
50
20
1
7
1914
1,664
74
xo8
132
22
1915
2,332
95
139
23
1
1916
3,368
128
142
21
1
1917
4,727
204
110
17
1
1918
5,555
277
78
7
3
1919
6,679
342
110
24
4
1920
8,132
409
135
187
31
6
1921
9,212
4231
173
246*
61
34
8
1922
10,704
462
217
315*
83
41
10
1923
13,253
515
266
384
100
54
12
1924
15,436
574
352
474
13z
57
15
7
1925
17,440
640
453
58o
175
85
21
7
1926
19,221
736
541
676
207
105
28*
8
1927
20,142
821
64g
778
268
119
35
8
1928
21,308
921
758
877
351
144
47
9
1929
23,060
1,014
930
970
433
170
52
11*
1930
22,973
1,047
1,109
1,042
501
183
56*
xo
1931
22,330
1,024*
1,252
1,076
523
186
64
11*
1932
20,832
945
1,279
1,119
497
188
67
15
1933
20,586
917
1,397
1,196
522
219
68
i6*
1934
21,472
952
1,432
1,298
675
236
76*
34
1935
22,495
990
1,477*
810
244
83
44
1936
24,108
1,042
1,687
1,643
960
222
45
1937
25,391
1,103
1,721
1,798
,,126
271
6ot
65*
1938
25,167
1,160
1,818
1,944
1,300
289
59
85
1939
26,140
1,190
2,020
2,034*
713t
290
1940
27,372
1,235
1,423
270
1941
29,524
1,28o
1,503
97
170
1942
27,869
1,217
858
74
1943
25,913
1,194
718
.
1944
25,466
755
1945
25,691
,,x6o
1,487
1946
28,100
1,234
1,550
1,770*
150
20
150t
1947
30,719
1,370
1,944
187
x84
28
1948
33,214
1,497
1,519
x,961
215*
219
30
1949
36,312
1,672*
1,520
2,131
352
267
36
1950
40,185
1,907
2,258
5x6
342
43
1951
42,525
2,098
1,600*
2,380
68z
425
58
180
1952
43,654
2,296
x,8oo
2,508
900*
510
88
,8o
1953
46,289
2,514
2,020
2,762
1,126
613
115
225
1954
48,324
2,688
2,677*
3,100
1,393*
744
139
225
1955
51,989
2,935
3,016
3,526
1,663
879
153
350
1956
54,004
3,187
3,477
3,888
2,030
1,051
181
400
1957
55,693
3,375
3,972
4,187
2,436
1,237
219
415
1958
56,645
4,549
2,936
* Change in series. t Major change in series.
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Appendix
TABLE 9. Private automobiles in use per million population,
in certain countries, igoo S8
U
i
d
n te Great
Year
19oo
States
zoo
Canada
France
Britain
Germany Italy
Japan Russia
x901
190
1902
290
1903
410
1904
670
86
220
1905
920
100
56o
410
1906
1,240
230
6oo
1907
x:6 Jo
330
830
1908
2,190
470
1,030
1909
3,380
710
1,200
1910
4 960
1,320
1,370
1,310
1911
6,590
3,020
1,760
400
1912
9,46o
4,930
2,150
480
1914
,6,8oo
7,130
9,420
2,710
2,710
2,560
3,160
740
58o
6,o
20
52
1915
23,200
1916
33,000
1917
45,800
1918
53,800
1919
63,900
41,200
670
70
1920
76,400
47,800
3,460
4,440
870
100
1921
84,900
48 loot
4,410
5,660*
970
goo
140
1922
97,300
51,800
5,500
320*
1,340
1,070
170
1923
zz8,ooo
57,200
6,670
J
,870
i,6to
1,390
210
1924
135,000
6z,8oo
8,730
10,900
2,110
1,460
250
.925
151,000
68,8oo
11,200
13,300
2,770
2,160
350
1926
,6z,ooo
77,900
13,200
15,400
3,250
2,650
460*
1927
169,000
85,200
r ,700
17,600
4,180
2,980
580
1928
177,000
93,700
V5,500
19,800
5,460
3,570
760
1929
189,000
101,000
22,600
21,800
6,690
4,170
8zo
69*
1930
i86,ooo
103,000
26,700
23,300
7,700
4,460
880*
61
1931
z8o,ooo
98,700*
29,900
24,000
7,990
4,490
980
68*
1932
167,000
90,000
30,600
24,800
7,570
4,510
1,010
92
1933
164,000
86,x00
33,300
26,400
7,910
5,200
1,020
157*
1934
170,000
90,900
34,100
28,600
10,200
5,560
I,120*
201
1935
177,000
91,300
32,400*
12,100
5,700
1,200
z6o
1936
,88,ooo
95,100
40,300
35,900
1 ,300
5,z6o
270
1937
197,000
99,900
41,900
39,100
16,600
6,250
85of
380*
1938
194,000
104,000
44,100
42,100
19,000
6,61o
830
500
1939
200,000
,o6,ooo
49,000
43,600*
17,800t
6,7,0
1940
207,000
1941
222,000
1942
930
1943
1944
1945
1946
201,000
100,000
38,300
37,300*
3,240
I
1oot
1947
214,000
109,000
40,600
4,160
4,020
360
,
1948
227,000
117,000
36,700
40,500
4,650*
4,730
380
1949
244,000
124,000*
36,500
43,800
7 48o
5,750
390
1950
z66,ooo
139,000
46,100
10,700
7,310
520
1951
277,000
150,000
37,900*
48,600
r ,100
9,010
68o
1
000
1952
280,000
159,000
41,300
51,100
18,500*
zo,8oo
1
020
,
1953
292,000
169,000
47,200
56,100
23,000
12,900
,
1
320
1
200
1954
300,000
175,000
62,1oo*
6z,8oo
28,000*
15,500
,
I
56o
,
1955
316,ooo
,86,ooo
69,300
71,100
33,100
18,2oo
,
1,710
1
800
1956
323,000
197,000
79,300
78,100
40,000
21,700
2,000
,
000
2
1957
327,000
203,000
89,700
83,600
47,300
25
500
2
410
,
000
2
1958
327,000
90,300
56,300
,
,
,
* Change in series.
1 Major change in series,
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Absorptive capacity, 144
Buddenbrooks, dynamics of, 1I, 80, 91,
Adenauer, 125
134, 135, 16z
Afghanistan, 44
Burma, 45
Africa, 17, 105, 109, 113, 115, 126, 135,
139, 141, 143, 152, 157, 164, 165
CAIRNCROSS, A. K., 24 n.
Belgian Congo, 39, 45
Cambodia, 44
Egypt, 126
Canada, 8, 9, 17, 18, 22, 39, 40, 43, 48, 49,
Kenya, 44
55, 56, 59, 66, 69, 113
Nigeria, 45
Quebec, 67
Southern Rhodesia, 45
Capital, 25
Suez, 125 n.
equipment, 48, 89
Agriculture, 8, 18, 22, 23, 24, 31
imports, 22, 37, 39, 44,
productivity of, 143
per capita, 20
Alaska, zz
private, 142
Anti-Trust Act, 75
working, 22, 23
Arms
Capitalism, 25, 121, 147, 151, 154, 155,
control of, Iz8, 129, 132, 133, 134, 136,
156, 161
137
democratic, 158
race, 91, 124, 125, 128, 137, 138
Capital/output ratio, 20, 37, 141
ARON, Raymond, ro6 n.
Ceylon, 44 n.
Asia, 17, 105, 109, 113, 129, 135, 139, 143,
Chemical industry, 64
152, 157, 164, 165
South, 141
South-East, 115, 126
Atomic energy, 67
Australia, 17, 22, 36, 37, 39 n., 56
Austria, 113
Austro-Hungarian Empire, 115, 118
Automobiles, 77, 79, 80, 83, 103, 136,
165
Axis Powers, 117
Babies, 12, 16
BAINES, E., 53, 53 n?, 54 n.
Balance of power, 114-18
Balance of trade, 32
BARss, Lawrence, 30
Battle-cries, 114
Ben-Gurion, 125
BERLIN, I., 157 n., 161
Bicycles, n
boom, 69
Birth-rate, 15, 1g, 8o, 8,, 87, 91, 143, 154
increase in as substitute for scarcity,
91
Bismarck, 71, 113
Boredom, 0, 91, 92
and babies, 156
Brazil, 44 n., 127
CHILD, Josiah, Io8, III
China, 5,9, 16,27, 36, 53, 56, 92,115,116,
117, 118,120,121,126,127,130,134,
136, 157 n., 165
Communist, 38 n., 45, 47, 56, 161, 163
Manchuria, 113
Nationalist, 29, 117
Civil strife, 92
Civil War (American), 75, 95, 98, 115, 153
Class struggles, 146, 147, 154
Classical economics, 149
Coal, 89
Cold War, 100-1, 107, 114, 117, 121, 125,
126, 130, 141, 142, 144
occasion for, 117
Colonialism, 1o8-I2, 156
and the British Commonwealth, 137
reasons for founding colonies, iso
Communications, 19, 24
Communism, 2,92,93, 102, 103, 120, 121,
131, 133, 134, 135, 137, 141, 145-67
First International, 158, 159
March 1917 Revolution, 160
modern, 159-62
19th Party Congress, 16o
and world hegemony, 131
Communist bloc, 129, 132, 138, 142
Communist inheritance, 66
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Communist Manifesto, 149, 159
Communist states, 12,8
Compound interest, 2, 7, 10, 36, 123, 127,
148, 154
Conservative Party (British), 76, 87
Consumer goods, 13, 23, 27, 74, 76, 79, 80,
83, 88, 95, 99, 103, 148
See also Durable consumers' goods
Consumption
defence, 82, 100
expansion of, 104, 119
food, 143
outlay on, 87
per capita, 16, 38, 98
private, 104
urban, 8z
Cost of living, 82
Cotton, zi, 64
Cotton-gin, 6o
Cotton textiles, 114
Crimean War, 27, 115
Crystal Palace, 61
Exhibition, 68, 70
CURTIS, C,, 151
Czarism, 93, 98
Defence expenditure, 8z, loo
DEaN, Paul, 137
Democracy, 159, 165
de Madariaga on, 92
Democrats (party), 119
Denmark, 39 n., 41 n,, 42 n., 63, 113,
126
Depreciation, 99
Devaluation, 87
Diminishing returns, 155
Domestic policy, American, 75
Drive to maturity, 4, 59-72, 75, 98, 119,
150, 152, 153, 157
definition and timing, 59--60
Japan, 63-5
maturity in perspective, 70
problems in defining maturity, 67-70
Russia, 65-7
sectoral patterns, 60-2
Sweden, 62-3
Durable consumers' goods, 3, 10, 11, 12,
16, 83, 87, 89, 92, 132, 136
effect of Second World War on pro-
duction of, 89
EATON, J., 147 n.
Economic determinism, 161, 164
Economic expansion, 40
Economic growth, 15, 17, 21, 25, 29, 36,
52, 93-105, 116, 121, 130, 152
Soviet rate and pattern of, too
Economic history, 14, 40, 48, 50, 72 n,, 89
Economic maturity, 114
Economic policy, 75
Education, 30
Eighteenth century, 16, io8, 109, 139
Eisenhower, 131
Elasticities of demand
income, 13, 16, 90, 133, 139, 154
price, 13, 16, 133, 139
Empire Preference, 87
ENGELS, 2, 157, 158
Entrepreneurs, 8, 13, 48, 140
sources of entrepreneurship, 50
Erie Canal, z5
Ethiopia, 44
Eurasia, 108, 114-21, 128, 129
Eurasian hegemony, 128, 129
Europe, 17, log, Icon., 129
Eastern, 116, 117, 118, 120, 121, 126,
130, 161, 162
Latin, 18
Medieval, 5, 30
Northern, 9t
North-Western, 5o
Western, 6, 10, 11, 31, 32, 33, 66, 67,
70, 74, 8o n,, 82-9, 90, tot, Io4,
107,110,115,118,119,129,137-9,
155, 156, 157, 158
post-maturity: pre-1914, 82; the
1920's, 82-3; the 1930'x, 83-7;
lit-1945, 87-8
FamtscaNT, S., 77 n.
Factory legislation, 71
Factory-system, 54
Far East, 141
Federal Reserve System, 75
Fifteenth century, io8
First World War, 27, 38 n., 65, 66, 67, 70,
72,78,88)94,114,117, 118,126, x6o,
163
Five Year Plans, 66
Russia, 70
Indian, 45, 105, 138
Foreign aid, 142, 143
Foreign capital, 49
Foreign exchange, 22, 23, 64
Foreign trade, 33, 37, 108, 109
entrepreneurs, 20
monopolistic, 109, 114
oligopolistic, 108, III, 121
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France, 9, 33, 34, 37, 55, 61, 6z, 65, 67, 87,
100, 101 n., 111, 113, 1,6, 119, 130,
141, 153, 157
Free elections, 159
French Revolution, 113
Full employment, 78, 8o, 89, 119, 155
GALURAITH, Professor, 81
Gallup polls, 21
Germany, 9, 27, 29, 36, 55, 56, 58, 59, 61,
6z, 65, 70, 87, 88, 100, 101, 114, 115,
116,117,118,119,120,123,126,130,
141, 153, 157, 160
Berlin, Iz5 D.
Ruhr, 66
and the Versailles settlement, 87
GILOERT, Milton, 82, 87
G,I.'s, effect on Western European eco-
nomy, 89
Government bonds, 47
Great Britain, 6, 8, 9, 17, 18,22,31,33,34,
37, 39, 40, 48, 49, 53, 54, 55, 57, 59,
6o, 61, 6z, 68,69,69 n., 70,71, 87,89,
500, 101, 111, 114, 115, 116, 118, 119,
124, 129, 137-9, 141, 153, 157, 158
Great Depression, the, 86,95,119, 120,155
Great Powers, 130
Great White Fleet, 76
Greece, 117
Gross national product (GNP), Ioo, 101,
102, 103, 127, 132
Growth-process, 2, 164
Growth-rate, 65, 101, 103, 104, 139
deceleration of, 102
maximizing of, 16
Hungary, Budapest, 12.5, 159
Hunting, shooting and fishing, a response
to modern satiety, 91
Hydro-electricity, 63
Imperialism, 111, 121, 138, 156
pre-1914, 111, 121, 138
Income
analysis of, 25
elasticities of demand, 13, 16, 90, 133,
139, 154
per capita, 143,
real, 12
India, 9, 36, 38 n., 44, 45, 47, 53, 56, 126,
127, 157 n.
First Five Year Plan, 45
Second Five Year Plan, 105
Third Five Year Plan, 105, 138
Indian Planning Commission, 45
Indonesia, 44, 126
Industrial output, 93, 95, 103-4
Industrial Revolution, 61, 11o n.
Industrial states, 128
Industrial worker, 160
failure to exhibit Marxist tendencies, 16o
Industrialization, 22,23,40, 116,121-2,193
Industries, 25
growth of, 24
Inflation, 47, 89, Io4
Intellectuals, 29
Investment-rate, 20, 21, 40, 41, 44, 46, 88,
93
Iraq, 126
Ireland, 16
potato famine, 66
Isolationism, 119, 138
Israel, 23, 114,
HARTZ, Louis, 17 n.
Heavy industries, Io4
Russian concentration on, 99, 103, 104
HEGEL, 71, 151, 157, 161
High mass-consumption, 4, 10-11, 15,
75-82, 84-5, 87, 88, 90, 91, 103, 119,
120, 121, 133, 136, 138, 145, 154,
155, 166, 167
reasons for American lead in, 84-5
and Russian policy, 133
Hire-purchase, 138, 165
Hitler, 87, 88, 134
Hoarding, contribution to growth process,
47 n.
Holland, 33, 34, 111
Housing, 78, 83, 99
and the British Conservative Govern-
ment, 87
Japan, 9, 10, 11, 15, 21, 24, 27, 29, 36,
38 n?, 39, 40, 48, 49, 55, 56, 58, 59,
63-5,68,74,80 n., 87, 88, 89, 90,101,
113, 114, 115-18, 120, 126, 129, 130,
134, 141, 153, 154, 156
level of consumption in, 88
Meiji, 47, 164
and the Versailles settlement, 87
Junkers, the, 27, 29, 58
Kaiser, 119, 134
KALDOR, N., 51 n.
KEYNES, 2, 13, 166
income analysis, 13
Revolution, 89, 155
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Index
Korea, I13, 114, 117, 121
Korean truce, 122
Kuomintang, 163
KuZNETS, 41, 42
Labour-force
age limits, 81
recruitment of engineers and scientists,
IOI
Labour Party, emergence of, 69 n.
Lambrettas for all, 91
Landlords, 47
Land-reform, 24, 47
Latin America, 18, 105, 126, 127, 135, 139,
141, 143, 164
Argentina, 8, 37, 38 n., 39, 44 n., 56,
127
Chile, 44
Colombia, 44
Mexico, 44, 53, 127
Venezuela, 39, 44 n., 127
Lebanon, 125 n.
Lenin, 66,99,145,148,154,159,161,162
his N.E.P. pamphlet, What is to be Done?
159
Levels
of armaments, 128
of consumption,19,26,28,88,100,135,
141
of income, 13
of population, 13
Liberal Party (British), 76, 8z
Liberalism, 27
Light engineering, 89
LINDAHL, 24 n., 42, 63
Lloyd George, 72, 82
LOCKWOOD, 56, 65
DE MADARIAGA, Salvador, 92
Malaya, 21
MALTHUS, 81, 153, 154, 156
Mao Tse Tung, 162
Market, 15, 30, 33
domestic, 33
-place, 15
MARx, 2, 71, 92, 145
Das Kapital, 158
Marxism, Io6, 145-67
central themes of, 145-7
Mass consumption, 89, 156
Mature economies, and military expansion,
87
Mature societies, 126, 127, 131
capitalist, 16o
Maturity, 3, 9, 115, 116, 130, 145, t66
of the Southern Hemisphere, 134, 136
technological, 162
See also Mature economies, societies
McKINLEY, 75
Mediterranean, 5
Mercantilism, 34, 108
Middle class, 76, 98, 146, 157
commercial, 29
Middle East, 5, 17, 22, 105, 109, 113, 114,
126,131,135,139,141,143,152,164,
165
Military bases, Io8
Military expansion, 87
MILLIKAN, M. F., and ROSTOW, W. W.,
143
Modernization, 8, 12, 16, 22, z6, 27, 30,
33, 119, 120, 126, 137, 139, 140, 142,
157063
World-wide, 137
Monopoly, 121, 147, 153, 154
Monroe Doctrine, 75, 115
MORISON, E. E., 164
Napoleon, 27, 114
Nasser, 125
National sovereignty, 107, ,o8, 129
Nationalism, 7, 26, 27, 28, 29-31, III,
112, 113, 119, 135, 140, 144, 151,
162
diversion to external objectives, 113
xenophobic, 28
Nehru, 125
N.E.P., Lenin's, 99
Net national product (NNP), 37, 41
New capital formation, 42
New deal, 79, 8z
New Zealand, 17, 21
NEWTON, 4, 32
Nineteenth century, 9, 21,
126, 139, 156
Nonconformists, 17, 34
Nuclear weapons, 121-2, 123, 127, 129,
134, 135, 156
and the power paradox, 125
NUTTER, C. Warren, 94, 102, 103
O.E.E.C. countries, 82
Office of Intelligence Research (U.S.A.),
44
OHKAWA, K., 88
`Organization Man', 87
Outer space, 91, 156
Output per capita, 4, 38, 93, 94, 95
176
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Index
Pakistan, 44 n., 1z6
Panama, 44
Peace, 123-44
and beyond, 136-7
problem of, 128-9
Peasants, 47, 88, 140
Perry, Commodore, 27
Philippines, 44, 75, 76, III
relinquishment of, III
seizure of, 75
Plough-back process, 24, 25,
139
Police-state dictatorship, 160
Population, ri6
age-structure, 80, 81
colonial, 112
Northern European, g1
rate of increase of, 20, 140, 141, 143
ratio of urban to rural, 10, I2, 22,
-resource balance, 95, 98, l02
Post-maturity, 11, 73-92, 135
American, 75-82
beyond high mass-consumption, 11-12,
90-2
outside America, 82-82
three-way choice, 73-5
Poverty, 92, 154
Powers, colonial, 29
PREST, A. R., 82
Price-elasticities of demand, 13, 16, 133,
139
Process of growth, 130
Production, dynamic theory of, 12
Profit
maximization, 157, 166
motive, 5t
Progressive income tax, 75, 150
Prohibition, 88
Proletariat, 147
dictatorship of, 145, 147
Protestant ethic, z6, 51
Public health, 30
effect of unlimited food, gt
technology of, 140
Puerto Rico, 44
Railways, 17, 25, 49, 6r, 64, 66, 78, 95
electrification of, 63
networks, 43
rate in economic growth, 6z
Raw materials, to, z8, 31, 33
Reform Bills, 69 n., 150
Repeal of the Corn Laws, 61
Republicans, 75
Revolution, 33, 94
1848, 27
French, 113
industrial, 61, 1 to n.
in weapons, 123-6
Roads, 18, 78, 84,
low Russian investment in, 99
special position of U.S.A. and Russia in
relation to, go
ROBBINS, Lionel, 73
ROBINSON, Joan, 153
Roosevelt, Franklin, 79
Roosevelt, Theodore, 75
RosTOw, W. W., 13, 47 n., 143, 149
Royal Economic Society, 166
Russia, 65-7, 93-105, 115, 124-5, 129-37
and passim
and the balance of power, 115
compared with America, 93-105
Czarist, 47
evolutionary similarities to America, 93
lag behind America (Fig.), 94
literature, 133
national interest, 129-31
police state, 132, 136
political control of economic develop-
ment, 104
and the right of the individual, 135
tractability, 131-7, 138
Satellites
sputniks, 93
towns, 103
Scandinavia, 18, 92
Scarcity, 145, 146, 156
SCHUMPETER, 151
Second World War, 37, 78, 79, 83, 88, 89,
114, 117, 119, 120, 123, 126
Secret police, 162
Sectors, 139, 148
agricultural, 49, 68, 99, 139
consumption and capital goods, 88, 148
export, 5o, 89
foreign-exchange-earning, 139
governmental, 23
industrial, 23, 65
interaction of, 150
key, 6z, 102,
leading, 14,23,52,63,68,69,78,88, x5S
major, 99
manufacturing, 39, 50
modern, 24, 26, 47, 64, 65, 139, 152
Nonconformist, 33
non-industrial, 26, 139
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Secular spiritual stagnation, see Boredom
Seventeenth century, 38, 108
Ship-building, 64
Silk, 21, 32, 64
Slump, see Trade depression
SMITH, Adam, 24, 32, 47 n., 55
Social overhead capital, 8, 17, 22, 24-6,
30, 81, lIZ, 139, 142, i6z
Socialism, 145, 16o
reasons for absence in America, 82
Societies
capitalist, 146, 550
feudal, see Traditional society
hierarchical, 5
mature, 126, 127, 131
modern, 20, z6
transitional, 7, 17, 28, 143, 144, 166
Western, 150
South America, see Latin America
Soviet policy, 135
basis of, 132
SPRIGGE, C. J. S., 158
Stages-of-growth
and aggression, zo6-22
central themes of, 149-56
and Communism, 145
limitations as a concept of history, 118,
121
Stalin, 66, 74, 117, 120, 121, 133, 134,
16o
Standard of living, 92
State controls, 93
State initiative, 51
State, Socialist, 149
Steel, 65, 78, 135
SVENNILSON, Ingvar, 83
Sweden, to, 58, 21, 36, 37, 39 n., 40, 42,
48, 49, 55, 59, 62-3, 65, 130, 141,
153
Switzerland, 10, 130
TAEuBER, V. and TAEUBER, I. B., 81
Taft, 75
Take-off, 4, 7-9, 16, 36-58, 104, 114, 121,
127, 130, 145, 152, 166
and Austro-Hungarian empire, 118
conditions for, 39: (1) rate of productive
investment (prima facie case), 41,
(Canadian case) 42, (general pattern)
43, (India and communist China) 45;
(2) development of manufacturing
segments, 46; (3) favourable political,
social, and institutional framework,
46-58
dating of, 8
general pattern, 43
inner structure of, 46
leading sectors in, 52-7
past and present, 139-42
preconditions for, 3, 4, 6-7, 17-35, 115,
157,126,130,138,139,140,143,144,
03066
supply of loanable funds, 46
Ten Hours Bill, 69 n.
Terms of trade, after 1918 and after 1945
compared, 88-90
Tertiary industry, 88
Thailand, 4.4
Tito, 131
Trade-cycle, 14, 6z, 74, 75
Trade depression, 63, 76, 77-9, 86, 94
Trade unions, 75, 153
Traditional society, 2, 3, 4-6, 17, 18, 20,
22, 26, 28, 98, 106, log, 112, 145, 146,
148, 151, 152
and the concept of war, 107
Traditionalism, 140
Turkey, 29, 38 n., 56, 117
Ataturk's, 164,
Twentieth century, to, 29, 114, 116, 121,
126,139
Twenty-first century, 127
Ukraine, 66
Underdeveloped countries, 43-6,104,134,
137, 140, 16o
Unemployment, 78, 81, 89, 147, 155
chronic, 141
U.S.A., 66, 75-81, 90, 93-105, 114 and
passim
boom of the 5920's, 76-7
Civil War, 75
contemporary problems, 9o
contemporary social behaviour, 87
deal with the British, 75
the future, 8o-i
the Great Depression, 77-9, 86
Mid-West, 66
New Deal, 79, 82
Pennsylvania, 66
post-Civil War, 114
post-war boom, 79
the progressive era (1901-16), 75-6
U.S.A. /Russia comparisons and contrasts,
93-105
the economic question, 102-3
major differences between, 98-too
the military question, too-s
178
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 Approved For Release 2000/08/28 : CIA-RDP78-03062AO01100030001-6
Victorian attitude to technological develop-
ment, 69 n.
Volkswagen, 88, 91
Waterloo, 157
Welfare, it, 0, x43
Welfare state, 12, 82, 105,
120,
135,
136,
token response to American-style
151
demand, 88
American version, 87
Western world, is, 100, 101,
102,
War, 14, 148, 154
io8, 129, 144, 150, 154,
156,
158,
balance of power, 1o8, xx4-18
colonial, 107, 108-1z, 147
First World, 27, 38 n., 65, 66, 67, 70,
72, 78, 88, 94,114, 117: x18, 126, x6o,
163
of independence, x12
kinds of, to7
in modern history, to6-7
Napoleonic, 114
and national sovereignty, 107, 108
regional, 107, 112-14
and relative stages-of-growth, lo6-2,2
Russo-Japanese, 27, 1x5
Second World, 37, 78, 79, 83, 88, 89,
114, 117, 119, 120, 123, 1z6
Spanish American, 75
165
WILSON, Charles, 32, 108
Wilson, Woodrow, 75, 76
WITTE, 66
Women, and boredom, g1
Wool, 21
Working class,. 158-9
Russian, 159
satisfaction with a bit of fairly regular
progress, 158
World hegemony, Communism and, 133
World power
diffusion of, 133, 136
and Western Europe, 137
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 Approved For Release 2000/08/28 : CIA-RDP78-03062AO01100030001-6
THE STAGES OF
ECONOMIC GROWTH
A NON-COMMUNIST MANIFESTO
BY W. W. ROSTOW
Professor of Economic History
Massachusetts Institute of Technology
This book is a generalisation from the whole span of modern
history. It gives an account of economic growth, based on a
dynamic theory of production and interpreted in terms of
actual societies. It helps to explain historical changes and to
predict major political and economic trends: and it provides
the significant links between economic and non-economic
behaviour which Karl Marx failed to discern.
Professor Rostow distinguishes five basic stages of economic
growth. He explains each stage in detail, and gives illustrative
examples. In particular, he takes two superficially very different
economies-those of the U.S.A. and the U.S.S.R.-and ex-
hibits in their history the same five stages of growth. He shows,
further, the relationship between military aggression and
economic growth. Turning to current problems, he considers
how far the concept of stages of growth may help us to cope
with the nuclear arms race, and the problems of organising a
world which will soon contain many new economically
mature nations.
Professor Rostow does not subscribe to the Marxist view
that history is uniquely determined by economic forces and
motives; instead he offers a comprehensive, realistic and
soundly based alternative to Marx's theory of how societies
evolve.
Cover design by Michael Harvey
CAMBRIDGE UNIVERSITY PRESS
American Branch: 32 East 57th Street, New York 22, N.Y.