Study of economics, as distinct from the study of political economy, is generally thought to be concerned with choice between different uses of scarce resources and the interacting results of choices that are made. Some months ago, Dudley Seers, now Director General in the Ministry of Overseas Development, mounted a scathing attack upon the current practice of applying to the developing economies, of India or Africa or Latin America, the concepts, institutional framework and assumptions about human behaviour used in the economics of developed industrial countries like the us or Great Britain. He particularly attacked economists’ concern with alternative uses of given resources rather than with the expansion of these resources; with the causes of cyclical movements rather than with the causes of varying rates of growth; and with closed national entities rather than with movements in the whole world economy.footnote1

Now H. Myint, Senior Lecturer in the Economics of Under-developed Countries at Oxford and evidently a disciple of Bauer and others whom Seers was criticizing, has attempted a counter-offensive.footnote2 Although he does not mention Seers, he appears throughout the book, and especially in his conclusions, to be anxious to guard himself against Seer’s criticisms without conceding Seer’s central analysis. What he, in fact, does, is to attack almost every one of the main lines of approach to the problems of economic development that have emerged from growth economists in recent years, and especially the un economic publications (for some of which Seers has been responsible).

Underlying much of Myint’s thinking is a disbelief in the idea that concentration on primary production is a symptom of backwardness and that secondary and tertiary industries are necessary to growth. Such industries, he suggests, are rather the consequence than the cause of higher per capita income. Increasing peasant production for export and the home market may, in his view, be the best way to economic development. But he goes further still and suggests that the balance of primary producing economies should almost always be weighted in favour of investing in primary production rather than in manufacturing—an argument he pursues while aware that fluctuations in world prices cause difficulties for any under-developed country dependent on one or two export crops and with a high ratio of exports to national income. He maintains that the advanced countries’ recently increased self-sufficiency in agricultural and raw materials, which has so greatly harmed the more backward primary producers, is the result of the latter’s high-cost, under-capitalized techniques of primary production.

Better transport and communications, improved techniques, would, of course, increase agricultural productivity in the under-developed countries. But Myint’s argument overlooks both the internal ‘morphology of backwardness’ (to quote Paul Baran’s Political Economy of Growth, a book Myint ignores), and the external structure of world markets. It is the structure of land ownership in Latin America and elsewhere and the unequal bargaining power of all under-developed lands in their trade with more advanced countries which holds back their development. Myint is able to note the ‘strategic position of the money lender and landlord’ in peasant economies and, in a chapter on land reform, praise the Indian development of ‘capitalist’ agriculture. This may indeed now be the source of agricultural surplus for India’s economic development, but it is still not only inadequate but also the cause of the swelling unemployment in India’s towns and cities—an unemployment which bears a heavy social cost without social return.

Even more astonishing are Myint’s comments on the external limitations of the under-developed countries’ economic development. He does, indeed, recognize the cheap-wage structure of mining and plantation economies, the limitation of foreign investment to extractive industries and the stifling of nascent industries, the perpetuation of monetary and economic dependence (in British colonial and ex-colonial territories) through the Sterling Exchange standard; and yet he can go on to emphasize the market opportunities provided by foreign export-import firms in Africa without mentioning the outflow of profits made by these firms which could have been used for local economic development; can speak of the ‘importance’ of retaining foreign enterprises in developing countries, for their capital, technical skills and knowledge, without examining in what sectors this capital is invested, its rate of return, the proportion of profits repatriated, the problems of debt servicing, etc.

In fact the book lacks any analysis of the totality of relations between developing countries and the advanced industrial nations. These are simply dismissed as ‘problems of subjective discontent concerning “foreign economic domination” and “colonial exploitation”’. This lack of analysis is made patently ridiculous by Myint’s explanation that low wages and low productivity in mines and plantations have been perpetuated as a result of cheap labour policies rather than by concentration on primary production. The truth is, of course, the contrary. Mine and plantation owners have needed to restrict colonial and semi-colonial countries to primary production to maintain their cheap labour policy. This is why it is absolutely necessary now for developing countries to break through these past restrictions and establish balanced economies, in order to improve their bargaining strength and overall terms of trade with the advanced countries.

Myint’s preference is evidently for slow and cautious advance based primarily on raising the developing countries’ agricultural productivity, with capital and technical assistance from foreign companies for industrial development and with international aid directed especially to those countries—India, Brazil and Mexico—which are beginning to show that they can absorb it usefully.