Agriculture and the Economic Development of Low Income Countries [Reprint 2018 ed.] 9783110808384, 9789027917133

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AGRICULTURE AND THE ECONOMIC DEVELOPMENT OF LOW INCOME COUNTRIES

PUBLICATIONS OF THE INSTITUTE OF SOCIAL STUDIES

PAPERBACK

SERIES

II

PROCUL

CERNENS

INTERNATIONAAL

INSTITUUT

VOOR S O C I A L E S T U D I E N - ' S - G R A V E N H A G E 1971

AGRICULTURE AND THE ECONOMIC DEVELOPMENT OF LOW INCOME COUNTRIES

by

Y. S. BRENNER

1971

MOUTON THE HAGUE · PARIS

(c) Copyright 1971 Mouton & Co., Publishers, The Hague, The Netherlands. No p a r t of this book m a y be translated or reproduced in a n y form, by p r i n t , photoprint, microfilm, or any other means, without written permission from t h e publishers. H i e responsibility for works published in t h e series "Publications of t h e Institute of Social Studies" rests with t h e authors; t h e I n s t i t u t e of Social Studies is not committed t o a n y opinions stated therein.

L I B R A R Y O F CONGRESS CATALOG CARD N U M B E R : 77—146701

Printed in H u n g a r y

Without general elections, without unfettered liberty of t h e press and of public meetinge, without untrammelled political discussion, life in all public institutions fades away, and will become a pious fiction, in which t h e only active element is t h e bureaucracy. Rosa Luxemburg. 1918

TABLE OP CONTENTS

INTRODUCTION

9

PAKT ONE: A G R I C U L T U R E A N D ECONOMIC D E V E L O P M E N T I . Population Trends as t h e Cause and Result of Progress

Agricultural 23

I I . Increasing Per Capita O u t p u t in Agriculture a n d t h e P e r Acre Yield of Farmland

44

I I I . F o r m s of Organisation in Agriculture and t h e Finance of Agricultural Development

71

I V . Cultural, Institutional a n d Political Impediments t o in Agriculture

98

V. International Trade E x p o r t Crops

and

Progress

Prices: The Prospects for Tropical 120

V I . I n d u s t r y and Agriculture: A Problem of Priorities

139

PART TWO: T H E USE AND ABUSE OF FOREIGN AID ( T H O U G H T S A B O U T GHANA) V I I . Introduction

163

V I I I . Foreign Capital and Laissez-faire

173

I X . The Case for Democratic Government

188

X . Centrally-planned and Supply-dominated Development Models . 199 X I . State-directed and Demand-dominated Models of Growth

....

210

POSTSCRIPT

241

INDEX

245

INTRODUCTION

Not so long ago I was of the opinion that, given time, modern modes of production would spread over ever-greater areas of the earth until eventually most if not all humanity would benefit from their material advantages. I thought that the process of economic development would spread to Asia, Africa and Latin America in much the same way as it had done in the past when Northern Europe's industrial achievements were emulated in North America, Central Europe, Russia and Japan. I believed that only Time separated the affluent from the materially poorer nations, and that sooner or later living standards were bound to rise appreciably everywhere. Since I came to Europe, in 1967,1 am losing confidence in such a "historical necessity"; am beginning to suspect that not only quantitative but qualitative changes have taken place in the economically-developed countries which now deprive the poorer nations of any realistic possibility of emulating the richer ones in the reformist way I had thought possible. The qualitative change which is the cause of my apprehensiveness appertains to the nature and structure of modern industrial production; i.e., to the massive substitution of labour by machine; to the replacement of unskilled labour by highly trained and educated workers; to the consequences of the horizontal ramification of modem industry and to the need for vertical integration to achieve economies of scale. The separation of tasks, the division of labour as Adam Smith called it, has now reached such a level of sophistication in the developed industries that most industrial operations have become repetitive. Consequently, modern industry is more reliably and less expensively served by specially designed mechanical equipment than by human labour. This was less so during the "take-off" periods of the economically advanced countries. Less than half a century ago, most of the repetitive tasks in industry were still

10

INTRODUCTION

performed by unskilled labourers and, unlike today, growing industries were able to absorb and actually required the labour of the poorly educated workers. To some extent this fact ameliorated part of the difficulties attending the structural changes which form part of the growth of industrial society. Nowadays, few industries can produce competitively without intensive use of mechanical equipment substituting labour. The supply of unskilled labour no longer stimulates industrial production, but more often, actually retards it. The necessary level of education and responsibility required from the modern labourer is also determined by the increasingly sophisticated equipment which is used in industries, by the growing complexity of interdependent links between different stages and processes of production, and by the tremendous diversification of useful materials and increasing exploitation of powerful new sources of energy. Yet the attainment of this type and level of education necessitates a degree of affluence which is itself dependent upon the development of modern industry, while at the same time, the level of responsibility may well hinge upon the state of education and the height of its rewards. Half a century ago, when the efficiency of industrial labour was more directly measurable in quantities of output than it is today, the fear of unemployment and starvation could still "substitute" for education and rewards. This is no longer the case with regard to modern industrial equipment. Therefore, unless a society is sufficiently rich that it can afford not only to "lose" the labour of its young people while they are being educated but can also afford their schooling, it has little chance of finding a suitable labour force to man modern competitive industry. Similarly, low productivity engenders low wages, while low wages engender poor industrial responsibility and efficiency. Another "vicious circle" which deprives industries in low income countries of the ability to compete successfully with affluent nations, results from the fact that through modern modes of production each establishment is normally closely dependent upon a number of other industries in allied fields. Even small plants require spare parts for equipment and supplementary industries which can supply them with partially finished goods and take their by-products and "waste". To be sure, only very few modern industries can operate without close vertical and horizontal linkages. Very few can remain

INTRODUCTION

11

competitive without increasing the number of processes in which they are engaged, i.e. backward and forward integration, without making sure of the supply of materials and components, of the sale of finished products and the ensuing economies of scale. Very few can operate successfully without a growing spectrum of horizontal or lateral integration, i.e. without amalgamation with other firms making similar products, or different products related through equipment, materials or techniques of production. Very few can survive competition without sufficient ancillary services entering slantwise in a kind of "diagonal integration". Yet the absence of these types of integration, the lack of ancillary services, allied industries, and forward and backward links, are the very essence of industrial underdevelopment. In other words, unless there is a wide range of industries, providing the inputs and using the surpluses of individual plants, a firm can seldom produce at competitively low costs. Hence, unless a great many industrial plants can come into existence almost simultaneously, few single establishments in an underdeveloped country stand any real chance of becoming internationally competitive; and unless a radical change in the remuneration of productive work, whether or not economically justifiable by immediately objective efficiency criteria can be achieved, even less chance exists for the industries of such countries to find a domestic market. For all these reasons, I have come to the conclusion that other than established economic views have to be sought for promoting the economic welfare of poorer countries. Another problem which is causing me increasing concern is the widespread preoccupation in developed countries with Neo-Malthusian "solutions" to the problems of economically less-developed nations. A kind of primitive "arithmeticism" has become fashionable, which relates populations, or rates of population growth, to economic variables in a way which suggests that birth control is the solution to the poorer nations' problems. The beauty of this approach lies not only in its simplicity: "if two people share an apple each gets more than if four share it", but also in two other aspects. Firstly, in the relief of not having to examine more effectively the causes which restrain the poor countries from emulating the technologies of their richer brethren, with their much greater production potentials than those required to match the actual rates of population growth in the underdeveloped world, i.e. with the production of

12

INTRODUCTION

more apples to share; and, secondly, in the relief of being able to shed moral responsibility for people's poverty in the "Second World" by putting the blame for it on their irrationality or immoderation. This fashion ignores simple facts such as that in some of the most densely populated countries, the income and expenditure per head of population is very high, while in some sparsely populated parts of the world per head incomes are the lowest. In the year 1964, 151 people lived on a square kilometer of land in India, and 356 in the Netherlands. Yet per head incomes were not proportionately lower in the Netherlands than in India. The deplorable result of this approach is that it leads to unjustifiable, and usually also ineffective, efforts to control population growth, when concentration of efforts for modernising methods of production and a more equitable distribution of wealth should have priority. The fact that mankind has learned technological ways and means to increase food production by far in excess of its ability to reproduce itself is ignored; such recognition would not only prevent the comfortable shifting of moral responsibility for much of the poverty in the underdeveloped world from the shoulders of colonial and neocolonial exploiters, but would also have farreaching implications for the socio-economic order in the richer countries themselves. For example, if it is recognised that new varieties of rice, such as LR5 and IR8, can increase rice yields by more than eight tons per hectare of land, or fifteen times the traditional yield; and that wheat harvests can increase to 300 bushels per hectare, or more than ten times the usual yield; and that there are at present food surpluses which cause headaches to rulers and farmers in some developed countries, it becomes obvious that what the underdeveloped world is suffering from is not objectively necessitated, pre-ordained poverty worsened by population growth, but the result of a manmade socio-economic system which is neither reasonable nor even operates satisfactorily in the service of its supporters. Thus, recognition of the real problems of underdeveloped countries would automatically have considerable socioeconomic implications for ruling establishments in the developed nations. All this is not intended to belittle the advantages of birth control in many parts of the world, but to stress that birth control cannot replace other more positive efforts at development, the success of which has proven to be a far more powerful deterrent to population growth than cheap contraceptives.

INTRODUCTION

13

A further problem which is worrying me is the degree of relevance of much of the established body of economic theory to the solution of economic problems in underdeveloped countries. For example, there is a well-established assumption in economic theory t h a t , on the whole, people act rationally towards the maximisation of certain advantages. However, decisions as t o what is rational or not are left to the economist who, if dealing with problems of underdeveloped countries, usually comes from a totally different cultural environment and has but scanty knowledge of the manifold factors which affect the rationality of decision making by people with other value systems. A similar difficulty arises with regard t o maximisation criteria which are measured, quite arbitrarily, either by material advantages or by ill-defined welfare standards which have little meaning outside the particular society and stage of historical development in which they originate. I n my Short History of Economic Progress,11 suggest t h a t capitalism played a decisive role in the economic development of western Europe and north America. I attempt to show t h a t from the time scientific and technological knowledge had sufficiently accumulated t o cause a perceptible change in modes of production, a change in human attitudes had also taken place which, in the societies concerned, gradually transformed increasing numbers of people from spiritual beings who, in order to survive, devoted reasonable attention to economic interests, into economic animals who also found it prudent to take some precautions to assure their spiritual wellbeing. 2 I further endeavour to clarify how societies, once they were sufficiently penetrated by this new spirit, became increasingly subjected to economic Laws founded upon the evident fact that, on the whole, people in such societies act "rationally" towards the maximisation of profits. Finally, I try to examine the way in which such a profit-conscious society is relentlessly driven towards greater economic productivity by two powerful mechanisms, i.e. how competition among capitalist owners of means of production and the demands by organised labour for a rising share of the fruits of production must, at least potentially, lead to mankind's increasing affluence. 3 1

Published by Frank Cass & Co. Ltd. (London, 1969). An idea more fully expressed by the late R.H. Tawney, Religion and the Rise of Capitalism (Harmondsworth 1948). 3 An idea more fully explored by Karl Marx. 2

14

INTRODUCTION

Thus, I conceive the economic development of Europe and America as a dialectical process in which the state of technology prescribed the mode of economic production, and the mode of production the dominant ideology and forms of social organisation. Finally, following this trend of thought, I consider the possibility that continued capitalistic development of productive technology, and therefore of mankind's objective ability to live without fear of hunger, influences the ideologies and social organisation of the societies which it affects. Hence, while the old system is still fighting rearguard battles, resorting to monopolist practice to overcome competition, and to State intervention or Fascism for protection against a wider and more equitable distribution of the fruits of production, a new generation, born into a society which is less dominated by fears of unemployment and starvation, may well be progressively adopting an ideology in which material criteria of rational maximisations no longer hold true. This idea can be demonstrated by the following schematic illustration in which the horizontal axis (tx — t 2 ) indicates the passage of time; the vertical axis (p—p) the Bociety, and the shaded area that portion of society acting under the influence of the virus capitalisticus. Ρ

1500

mo

mo

zzzzzzzzzazzz Ρ

U

Only in few countries, and even there only during relatively short periods of their histories, did a sufficiently large proportion of the population behave in the manner considered "natural" by economic theorists. But most of our economic literature originated in these countries and during these periods. The question which remains unanswered, then, is whether or not this type of "natural" behaviour is really natural under all circumstances, and, even more important, if it is necessary for the elimination of poverty. Karl Marx was apparently of the opinion that it was necessary. He regarded Capitalism as the inevitable outcome of the disintegration of the preceding socio-economic structure, i .O.j SIS it historically necessary stage in the development leading from slavery and feudalism to the more equitable socialist society. He allotted to capitalism

INTRODUCTION

15

the task of concentrating wealth and labour and gave it the concomitants, love of gain and fear of unemployment and starvation. Pre-capitalist society, in Marx's view, exchanged commodities for money and money for commodities, the object of this exercise being the satisfaction of real wants. In capitalist society, the capitalist reverses this sequence of transactions. He exchanges money for commodities not to satisfy real wants but in order to exchange them once again for more money, i.e. for profit. Thus, the capitalist's greed becomes an instrument of economic progress. B y paying workers less than the full value of their labour, he restricts consumers' demand and accumulates surplus value which, given suitable conditions — capitalistic competition — becomes productive capital. At the same time, at the other end of the social scale, the disintegration of traditional society deprives the worker of his means of production and the limited security which comes from working the land, and of his social economic safeguards which come with rural, family and tribal ties. Society, just beginning to escape from medieval scares of imaginary ghosts and demons, thus enters the real nightmare of unemployment and starvation. But these fears, without which there could be no accumulation of wealth, no concentration of labour and no economic progress, impose upon one and all the need to act rationally according to the various maximisation criteria. Greed and fear thus become the basic motive forces for economic progress. Take away fear and the system collapses. In Russia, Stalin became the ruler of a society which had not yet fully reached the stage of self-sustained capitalist development, and he reached this position as representative of the party which had made it its objective to give "to each according to his needs", i.e., to take out the fear which sustains capitalistic progress. Unlike his predecessor Lenin, who tried to substitute hope and logic for fear, Stalin merely resorted to a different type of fear for stimulating the concentration of wealth and labour. He replaced capitalist competition by the efforts of the planner, and capitalist threats of unemployment and starvation by penalties for not fulfilling production norms. Stalin, and his various imitators, thus deviated from Marx's philosophy of dialectical materialism and historical necessity in the attempt to use political power, the superstructure, to create economic reality, the infrastructure. In the process, they also substituted output statistics for human progress and bureaucratic

10

INTBODUCTION

insensitiveness for capitalistic exploitation. What they left unaltered was the premise t h a t greed and fear are sufficiently rooted in human nature t o make Man act rationally. Lenin apparently shared this view though, unlike Stalin and his followers, he more readily granted Man with sufficient intelligence to be able t o see t h a t by foregoing some degree of present satisfaction, he may be able to get more in the future. I n other words, while Capitalism and Stalinism stressed fear, Lenin stressed the love of gain. The whole body of economic development theory is thus based upon a view of human nature which does not fit reality in tribal and perhaps post-capitalistic societies. There is evidence t h a t people do not always act in accordance with this type of rationality. The Buddhist monk cannot be motivated by economic factors, but then, of course, he has not produced an economy capable of providing affluence. The views of the various followers of Herbert Marcuse are conditioned by the society in which they originate, a society which is already technically and economically able to provide affluence and security from hunger for all, though to be sure, it is socially and politically not ready to do so. Graveyards are full of soldiers who were killed for the sake of ideas. I n the Kibbuzim, settlers do things without obvious personal, economically rational motivations. There are periods of heroic reconstruction in the histories of many developed nations, periods when social pressure and not economic sanctions or rewards motivated people to make outstanding efforts. Unfortunately, however, none of these spells of elation were anywhere sufficiently sustained to show evidence of being a practical alternative to the economists' rationality in the process of economic growth. Of the two recent attempts to use mass enthusiasm as an instrument of economic development, the first, in China, had to be abandoned, while the second, in Cuba, is still too young to provide reliable results. Fidel Castro, doing to Marx what Marx once did to Hegel, i.e., standing his theory on its head, began from the assumption t h a t consciousness alone can alter social reality. H a d he not taken up arms out of moral indignation against the injustice, brutality and corruption of the Batista regime ? Hence, he replaced dialectical materialism by a kind of idealistic moralism in which moral consciousness became a productive force replacing economic profitability. According to Castro, economic socialism without communist moral is of no interest. His idea is to move, at least mentally, directly from the pre-industrial to the fully indus-

INTRODUCTION

17

trial society. In this way, he turns Man's natural generosity, rather than capitalistic rationality, into the motive power for economic development. If history should prove him right, most axioms of present-day economic theory will be proven irrelevant. If rapacity and fear of starvation are the products of one form of social organisation, it may well be that another form can reach economic affluence without the destruction of, say, the extended family or similar precapitalistic structures, or may even find constructive tasks for them. There are other, perhaps better, examples to illustrate the thin basis of economic development theory as far as low income countries are concerned. One could think of the Multiplier in countries with a large subsistence sector etc., but for the purpose of illustrating some of my worries, the above will suffice. Is it not just possible that the God Mammon could be replaced by individual freedom and humanity ? A number of sociologists have apparently discovered that one important factor which separates developed civilisations from the economically less developed, is that the former have learned to distinguish between instrumental and ceremonial activities. The Europeans, they say, know perfectly well that sowing the seed makes crops grow, though they too may sometimes add a prayer; on the other hand, people in the economically less developed parts of the world often believe that both prayer and sowing are of equal importance. Whether or not this is true, there can be no doubting the fact that people of developed nations show a surprisingly rationalist approach in pursuing their interests. Unfortunately, this implies terrible dangers for other societies. For example, it is not wholly unreasonable to assume that when the Apartheid Government of the Republic of South Africa learns how to replace more of its African labour by cheaper and more efficient machines, it will force Africans by law to practice birth control, either by forcing the women to take pills or by sterilising the men. Such laws will then be justified by the perfectly rational explanation that it is for the Africans' own good because it will spare them later the ill-consequences of unemployment. That this kind of reasoning is not beyond the capability of "European stock" populations is sufficiently demonstrated by Hitler's extermination policies regarding Jews and Gypsies, and by Nazi Germany's plans to divide Europe's population into Arian masters and Polish and Russian slaves. In this context, though not really 2 V—03

18

INTRODUCTION

comparable, it may be worth remembering that the dropping of atom bombs on Hiroshima and Nagasaki was rationally justified as "necessary" by the majority of people in western Europe and North America. It is for these reasons that moral issues are deeply involved in problems of economic development. Although the view may be taken that each period and situation has its own moral value system, and that one's own view is therefore transient and time-conditioned, I still feel justified in making certain value statements. I wish to put humanity, notwithstanding its moral, religious and humanistic traditions, before the production and over-production of tangible economic goods. To be sure, half a century ago I would probably have been less explicit in putting such non-material criteria before the satisfaction of economic needs, but half a century ago the technical capacity of producing food and shelter for all had not been as fully realised as it is today. Nowadays, few technical, i.e., real impediments remain to giving to all the minimum required for survival, and so it is the ill-adjustment of society to its technological capacity which causes poverty and degradation. In fact, some organisations in developed countries are more concerned and more actively engaged in convincing people that they want more, i.e., in creating false needs, than in production. Hence, it may not be entirely unjustified to give some thought to problems which are outside the scope of economically directed rationalism, but which affect people's happiness. The rationalism of the economically advanced peoples may well imply for their less favoured kin that they are not to be relied upon for assistance in matters which are outside their short-sighted immediate interests. Moreover, at the back of their minds, many Europeans have not recovered from their mercantilist past and from fears like those expressed half a century ago by people such as Oswald Spengler about the "yellow peril". The road towards development will unfortunately have to be paved by the peoples of the developing countries. There are no short-cuts. These are some of the thoughts which passed my mind when summarising my experience of life and work in Ghana. This summary, which forms the second and empirical part of the book, should be looked upon as the background for the development policy recommended in the first part, which deals generally with the place of agriculture in the evolution of economically

19

INTRODUCTION

underdeveloped countries. It is based upon my lecture notes for two courses, one of which I taught for the Institut Africain de D^veloppement Economique et de Planification in Dakar, and the other for the Food and Agricultural Organisation in The Hague. The lectures do not necessarily represent the point of view of either of these international organisations. Y.

S.

Bbennek

Summer, 1969

2·

PART ONE

AGRICULTURE AND ECONOMIC DEVELOPMENT

I POPULATION TRENDS AS THE CAUSE AND RESULT OF AGRICULTURAL PROGRESS

A little over a century and a half ago, Robert Thomas Malthus worried about the tendency "in all animated life to increase beyond the nourishment prepared for it", i.e., the tendency of population to increase beyond its capacity to find its food. He summarised this idea in the too often misquoted passage in his Essay on the Principle of Population·, "population, when unchecked, goes on doubling itself every twenty-five years, or increases in a geometrical ratio", 1 while food production, by any imaginable "exertion of mankind" is unlikely to increase at a similar rate.2 Obviously, Malthus could not foresee the great developments in technology, chemistry, botany etc. which took place in the period following the last two decades of the nineteenth century and which totally revolutionised agricultural production.3 Theoretically, there are always several possible types of relationship between increasing populations and the supply of land. Firstly, a growing population may be faced with a fixed and, at the prevailing level of technology, fully utilised supply of land. Any in1

T . R . Malthus, Essay on the Principle of Population, 1798 (Everyman edition, 1960), Bk. I, Ch. I, p. 8. i Ibid., p. 10. 3 For example, compare man-hours required for t h e production of one metric t o n of wheat, maize or cotton in t h e U.S. and yields in quintals per hectare in different decades. Source: Colin Clark, The Conditions of Economic Progress (London, 1960). Man-Hours Required Year Wheat Maize 1800 135 137 1900 40 68 1910 1950 13.4 9.6

Cotton 2,645 1,248 581

Quintals per Hectare Wheat Maize Cotton

9.8 10.6

16.3 23.5

2.0 3.1

24

AGRICULTURE AND ECONOMIC DEVELOPMENT

crease of population, unless accompanied by the introduction of new agricultural techniques, must then lead to "diminishing returns from labour".4 In other words, a greater number of people will be employed upon the same area of land; consequently, total output from land and labour will increase but by less than the additional supply of labour warrants; i.e. per capita production will decline. A second possibility of the same type of relationship and with similar results, may be one in which a few people are able to select the most fertile land for cultivation but, faced with population growth, have to make use of increasingly less suitable land. Here, too, total output will increase while per capita production diminishes. This is the situation in a number of underdeveloped countries today.® A third, not dissimilar possibility of this type, is sometimes observed in areas where a rotative system of cultivation is widespread. Here one may find that population pressure forces farmers to reduce the fallow period. This decreases the yield of the land, as happens today in parts of South Ghana, where two or three decades ago farmers cultivated portions of their land at seven to ten-year intervals and now return to each holding after only four or five years, i.e. before the land has regained its full rate of fertility. Again, although total output is usually greater than it was a decade or two ago, per acre yields and per capita production are smaller. All three above-mentioned possible relationships between population accretion and the supply of land have in common that land is assumed to be in fixed supply, that no improvements take place in land utilisation, and that there is no possibility for absorbing surplus labour in other non-agricultural employment.® In all three cases, the productivity of labour, and consequently income, is bound to fall, and underemployment or disguised unemployment of labour increases.7 This appears to be the type of land-labour 4

The law of diminishing returns implies that as equal increases of a variable factor are added to a constant quantity of other fixed factors, the successive increases in output will after a point decrease. ' F o r example, in Indonesia, Philippines, Algeria, Morocco. Vide F.A.O.: The State o] Food and Agriculture (1967), p. 17. 6 This m a y be because productivity in food production is too low t o feed those people who are not directly productive in agriculture, or because n o other openings for work are recognised or available. 7 For a definition of underemployment, see Y.S. Brenner, "Problems o f Underemployment in West Africa", in Africa Quarterly, 1965, p . l . In gener-

POPULATION TRENDS

25

relationship which Malthus had in mind when he made the statement quoted above. Another type of land-labour relationship may arise in parts of the world where population pressure has not yet driven cultivation to the limits of supply of fertile land at the existing level of technology, and where cultivation may be extended without much risk of diminishing returns. In these cases, the accretion of population will be matched by more land utilisation and the level of per capita output and consumption will neither fall nor rise. This may well have been the situation in North America in the early period of European settlement. The abundance of land was so great that people could find fertile land whenever they needed it, and consequently the accretion of population did not lead towards the dire Malthusian predicament. Such a relationship seems still to exist in parts of South America.8 A third type of land-labour relationship is where increasing populations cause increasing production. If a population is sparse and widespread over a large area of land, it may not be able to cooperate effectively in efforts to raise agricultural production and productivity. In fact, an insufficiency of population can be as detrimental to development and the achievement of higher living standards as its overabundance. If a dam for storing water during the dry season is to be constructed, it may often only be achieved and economically used when sufficient people can benefit from it and are available to supply the labour required for its construction. The same is true in fighting rodents, a task which usually requires the clearing of bush over a wide area; only if enough people are there to clear a sufficiently wide area simultaneously can the effort be made effective. These problems arising from insufficient population become even more obvious if one is concerned with a cash or market economy, i.e. when agricultural development rises above the level of subsistence farming. Altogether then, the assumption that population growth must always present a danger to welfare cannot be universally accepted as correct. There are cases in which, ceteris paribus, a rising population will result in falling living standards; al terms, it means the utilisation of labour at a low rate of productivity as distinct from the laying-off of labour altogether, which is the characteristic of unemployment — the phenomenon of industrial society. 8 Vide F.A.O., op. cit., Figure II—I, p. 14.

26

AGRICULTURE A N D ECONOMIC DEVELOPMENT

there are cases in which it will be matched by a parallel rise in output and have no effect on living standards at all; and there maybe cases in which population growth will make previously impossible efforts possible and consequently raise the standards of living. So much for the relationship between land and population. There are other elements which make this relationship more complex, and at the same time less relevant. Firstly, the yield of the land does not depend on two inputs, land and labour, alone. Nowadays, there are possibilities of raising the yield of land in a variety of ways through inputs, which for the moment may collectively be labelled Capital. Thus, investments in water supplies, in drainage, in improved seed and fertilizers, etc. may sometimes raise labour requirements far beyond the supply of labour even in places which have hitherto been considered "overpopulated". In this case, more capital will be required to make up for the new shortage of labour; this capital will take the form of heavy agricultural equipment, means of transport, sources of power, etc.; that is, forms which are labour saving. Again, productivity will increase and, with it, chances for higher living standards. The effect of the introduction of labour-saving and land-improving capital is one factor which Malthus certainly underestimated.* In fact, a look at the statistics of some so-called densely populated • Wheat yields in quintals per hectare of Land 1885—89 1909—13 1925—29 1934—38 21.3 22.5 23.1 U.K. 20.3 24.1 14.1 21.3 22.0 Switzerland 23.5 30.3 Netherlands 18.8 29.8 Algeria 4.9 6.7 5.5 5.6 Source: Colin Clark, op. cit., Table XXVIII, p. 296.

1949—51 27.3 27.7 36.9 5.8

Average Product per man-hour in Agriculture and Fishing in the U.K. (Index Numbers) 1867—69 1870—76 1877—85 1886—93 1904—10 142 153 159 174 188 Number of Males employed in Agriculture and Fishing in the United, Kingdom 1867- 69 1870—76 1877—85 1886—93 1904-10 1,556,000 1,490,000 1,408,000 1,358,000 1,327,000 Total Population of the United Kingdom 1861

1871

1881

1891

1901

24,525 000 27,431,000 31,015,000 34,264,00 38,237,000 Source: U.N. Pjpulation Bulletin and Colin Clark, ibid.

1911 42,082,000

27

POPULATION TRENDS 10

countries shows that agriculture was not only able to satisfy the rising food requirements, but also the demand for raw materials needed in industry; all this, while the percentage of people employed in agriculture relative to total population was consistently falling. 11 In Antiquity and during the Middle Ages, the surplus product of perhaps 90 per cent of a country's population engaged in farming was required to feed the remaining 10 per cent of administrators, soldiers, priests, barrelmakers, salt traders etc. This is almost true for the majority of underdeveloped countries even today, where it takes 60-70 per cent of the population labouring in agriculture to feed the remaining 40 or 30 per cent.12 At the same time, in most industrialised countries no more than 10-15 per cent of the population are engaged in farming and manage to produce food for the remaining 90-85 per cent, with more to spare and to ship to countries where food is short. Malthus certainly underestimated mankind's ability to increase "the nourishment provided for it". How then does his other statement regarding the rate of accretion of people, stand up to inspection ? This was wordedmore carefully. "Population, when unchecked, goes on doubling itself every twenty-five years, or increases in a geometrical ratio", he wrote, and mentioned a number of positive 10

The terms "densely populated" and "overpopulated" are too often used as if they were synonymous. This is certainly not the ease. For example, India with 161 persons per square kilometer is more "overpopulated" than the Netherlands with 356 persons per square kilometer, Monaco with 14,766 and Italy with 168 persons per square kilometer. Vide Table 2, U.N. Statistical Yearbook for 1964. 11 Population and Rural Population in France (in Millions) Year

Total Population

Rural

Population

1876 36.9 24.9 1886 38.2 24.4 1896 38.5 23.5 1906 39.2 22.1 1911 39.6 22.1 Source: J. H. Clapham, Economic Development of France and Germany 1815 -1911 (Cambridge, 1921). Here extracted from 1961 edition, p. 159. 12 In most underdeveloped countries, the percentage of people employed in agriculture ranges between 55 and 91, but this includes the production of industrial raw materials and not only foodstuffs. In Ghana 61% are engaged in agriculture, but more than 30% of the output is cocoa which is not locally consumed: at the same time, close to 15% of the food consumed is imported.

28

AGRICULTURE AND ECONOMIC DEVELOPMENT

checks which might reduce the rate of population growth. These positive checks were war, famine, disease, vice and other "acts of God". In fact, Malthus did not actually state that population will and must double each twenty-five years; all he said was that it might increase by a hundred per cent in a quarter of a century. He probably based his assumptions on observations in North America during his lifetime and in parts of England over a number of years close to the time of writing.13 Today, population growth in many underdeveloped countries is reckoned at about 2.5 per cent per annum, which means that a country's population would double after 28 years.14 However, no part of the world has experienced more rapid population accretion than Europe and North America in the 19th and early 20th centuries, yet it was here that living standards rose most of all. In other words, it may not be the accretion of people which puts the strain on economic development. Moreover, after the first quarter of the present century the rate of European population growth began to abate. This was not due to Malthusian reasons such as famine, disaster, disease etc., or to the solutions recommended by him—the encouragement of self-restraint, that assumed virtue of middleclass respectability—but to the decision taken by millions of people not to have more children than they could easily support. Why did this change in people's attitudes occur? Why did people whose fathers and grandfathers were proud of having large families, decide that two children or even one was all they wanted? Most probably this has to do with the attainment of higher living standards. Let us first consider the problem of large families in poor countries. There is no pension scheme for the aged, no income which can be saved or spent to gain prestige. Consequently, the material security of a head of family in his old age and his esteem in the eyes of his neighbours may both depend upon the size and social image of his family. Many sons give him the prestige of being a 13

Estimated Population (in millions)

Europe and Asian USSR North America

1750

1800

1850

1900

144

193

274

485

1

6

26

81

Source: U.N. Population Studies N o . 17, p. 11. 14 Increase by 85 per cent after 25 years.

POPULATION TRENDS

29

"strong" man, t h e respect which numbers accord in primitive societies, and also greater security in his old age. All these considerations are less relevant in a more affluent society. I n a materially richer society, the contrary may be true; a large family will cut deep into savings and other values which such a family may hold. I n the first place, the acquisition of some wealth or security for old age is more rationally pursued by savings and investment. Prestige can be achieved through learning, money-making or other efforts which are only rarely open t o people in the underdeveloped countries. Most important of all, in an affluent society, every new child becomes a new burden on the income and on the ability to save or buy, without adding to the household's prestige or future economic security. For this reason, before a family in a rich country decides on having another child, it will consider the extra expense and the "opportunity cost" involved, 15 such as having no holiday the year the child is born, and the money which has t o be spent t o clothe, feed and educate the child until it reaches maturity. Moreover, as the members of a family no longer depend upon each other for protection and economic assistance, a child is no longer an economic asset. People in affluent societies therefore usually have children because they like children, and in full knowledge of their cost. I n poorer societies, on the other hand, people have children not only because they are liked but also because they may convey those advantages which in the more developed world can be achieved by other means, namely, security and prestige. I t appears, therefore, t h a t Malthus was unaware of the possibility t h a t as societies grow more affluent, their members may become less inclined to produce as many children. 16 From a historical point of view, the population problem is also surrounded by questions which have never been conclusively answered. For example, for thousands of years Europe's population increased very little. There is some evidence indicating a rate of population accretion in the late 12th and 13th centuries t h a t was relatively greater t h a n the previous rate. Early in the 14th century 18 "Opportunity cost" means the loss of other advantages lost by the choice of a specific one. 16 Malthus was not ignorant of contraception but as a churchman regarded it as a sin and did not recommend it. See chapter on Malthus in Y. S. Brenner, Theories of Economic Development and Growth (London, 1966).

30

AGRICULTURE A N D ECONOMIC DEVELOPMENT

the accretion apparently abated again,17 and by the middle of that century the notorious Black Death had reduced European population by between one and two-thirds of its former number.18 In the late 15th and the 16th centuries, population growth was again fairly high;19 although it slowed during the 14th and part of the 18th centuries, the movement gained impetus and reached a tremendous rate of accretion towards the end of the 19th century. The question which has never been satisfactorily answered is why this accretion should have begun when it did and taken the course it followed. Some time ago, it was fashionable to link population accretion with the reduction of mortality. Famous economic historians proved that accretion was due to progress of medicine and the use of preventive medicine,20 yet the evidence they produced does not really stand up to careful examination.21 Firstly, because the cures which might have reduced epidemics, the main cause of reversals in the upward trend of population growth if this theory is correct, were only discovered after population growth had already progressed very considerably. Koch and Pasteur did not produce their vaccines until the last quarter of the 19th century. The rate of accretion in Europe did not begin to abate again until forty years later. The medical literature which preceded Koch and Pasteur was never really widely read even among those classes of society which could have been familiar with it, and indeed there is no positive evidence of it having had any effect on population trends. Even today, it cannot confidently be said that the continued accretion of people in a great many underdeveloped countries is due to western medicine. Nowhere has western medicine penetrated very deeply into the areas where population growth is most accelerated. Recently another theory about causes of population growth has gained some credence, i.e. the theory of changes in human fertility.

17

Vide Μ. M. Postan, Some Evidence of Declining Population, a publication of the Economic History Society, 1939. u Vide J. Cox Russell, British Mediaeval Population (Albuquerque, 1948). " Vide Y. S. Brenner, "Prices and Wages in England 1450—1560 and 1550—1650" in Economic History Review, No.2., 1961 and No.2, 1962. " Vide G. D. Griffith, Population Problems in the Age of Malthus (1926). tl Vide D. V. Glass and D. E. C. Eversley, Population in History (London, 1965).

POPULATION TRENDS

31

As the process of population accretion occurred almost simultaneously over great areas in which economic conditions and medical knowledge were very different, the idea has developed that something may have happened to human fertility in the 15th or 16th century. In this connection, female fertility and lactation habits have been discussed; these are sometimes associated with the frequency of childbirth. Again, the evidence is there but is not fully convincing. Many other theories link, for example, population with the disappearance of the Black Death from Europe. But then the question arises why the Black Death disappeared when it did ? The usual anewer is that it disappeared because of the disappearance of the rat which carried the plague flea. A new question arises; why should the rat have disappeared when it did ? An answer commonly made is that people changed from building houses of wood to houses of stone which were less hospitable to this kind of rat. The conclusion is that the cause was economic: i.e. that people moved to stone houses. There is evidence for and against this theory, and there is no clear-cut explanation of the elimination of the flea-carrying rat from Europe. There is also a theory and some evidence of social change affecting population movements, held to have been influenced by late marriages and a growing belief that a man should marry only when he has built a home or can find a suitable income to support a family. Economic historians have made much of these changes in the marriage age in European society in explaining short-term fluctuations in the European rates of population growth during the 17th, 18th and 19th centuries. There is certainly some evidence to support this view. Abatement of European population growth rates often seem to coincide with changes in marriage patterns. There can of course be childbirth outside marriage, but the numbers involved are likely to be too small to make up for the total loss of children occasioned by postponed marriages. Once again, there is a point for discussion but no conclusive evidence. This may have been a contributing factor together with others. Finally, there are those theories which link economic productivity with population growth. If one looks carefully at the periods for which there is evidence of a high rate of population accretion, one discovers a resemblance between them and periods of marked economic development. There are historians who speak of an early

32

AGRICULTURE A N D ECONOMIC DEVELOPMENT

economic revolution in parte of Northern Europe during the 13th century. There is also good evidence of economic progress in the 16th century, while there is no question that economic development actually took place in the 19th century. In other words, all periods of rapid population growth can also be identified as periods of economic progress. The question then arises whether economic progress is the result of population growth, or whether population growth is the consequence of economic progress, i.e. a greater possibility of supporting extra people and therefore of a higher survival rate. Finally, it is also possible that the two phenomena were merely coincidental and yet reinforced each other. Again, no answer is readily available, but it is interesting to speculate that population growth in, say, the 13th century forced people who were increasingly confronted with a limited supply of land to devise ways and means of improving per acre output. For this there is some evidence. Thus, it would be reasonable to believe that following the Black Death, the sudden reduction of population allowed improved methods of production to be utilised on the most fertile land, and that this may well have greatly increased output per acre and per capita, as a method of production is seldom forgotten.22 The people who survived the disaster of the Black Death may have been considerably more affluent than those who lived before them. Again, one can speculate that by the end of the 15th century (not earlier because between 1350 and 1450 the Plague periodically returned)23 an increasing rate of population accretion may once more have narrowed the gap between affluence and population growth. If this really happened, there must have arisen a new stimulus for devising even better methods of production and an even more rational exploitation of land. It is a fact that from the end of thei 15th century onwards we learn about enclosures, new uses of land, and movements of people from one area to another; taken together, these indicate a new stage in man's history and changes in agricultural practices. A case might thus be made for the existence of a causal relationship between population growth and eco22

This is perhaps substantiated by the very low corn prices and high wages during most of the 16th century. See Lord Beveridge, Prices and Wages in England (London 1939). 28 Vide C. Creighton, A History of Epidemics in Britain (Cambridge, 1891).

POPULATION TRENDS

33

nomic progress. It might be said that as population reaches the limits of its ability to find nourishment from the available land with existing methods of production, new methods of increasing output will gradually be found. Where this does not happen, equilibrium between land and people will be maintained by the Malthusian positive checks of migration or death from starvation. The question which this theory fails to answer is how it came about that in the 16th century, once the loss of population from the Black Death was made up, Europeans became so very quickly animated by the new spirit of invention which helped them to escape the Malthusian cycle. Here again, one may mention cultural factors such as the escape of learned scholars from the East to Western Europe after the fall of Constantinople, the decline of the authority of the church and of its restraining influence on science, and the growth of the spirit of capitalism. Together, these transformed society and made it break with retarding traditions to a certain extent; minds were opened to the search for new and better methods of agricultural production. Pictures from this crucial period show evidence of all this, but conclusive proof of the explanation is still missing. The nearest thing to an explanation is probably that offered in R. H. Tawney's excellent book, Religion and the Rise of Capitalism. Tawney tries to enumerate and link together the various factors which might have produced this new state of mind, so very suitable for the modernisation of methods of production, which eventually freed European society from many of the limitations imposed upon its welfare by the rapid accretion of population. 24 He explained Europe's ability to have simultaneously a high rate of population growth and an increasing rate of affluence as follows: "History is a stage where forces which are within human control contend and cooperate with forces which are not . . . Side by side with the expansion of trade and the rise of new classes to political power, there was a further cause, which, if not the most conspicuous, was not the least fundamental. It was the contraction of the territory within which the writ of religion was conceived to run . . . The idea of a rule of right is replaced by economic expediency as the arbiter of policy and the criterion of conduct. From a spiritual being, who, in order to survive, must devote a reasonable 24

R. H. Tawney, Religion and the Rise of Capitalism, mondsworth edition, 1948).

3 V—93

Introduction, (Har-

34

AGRICULTURE A N D ECONOMIC DEVELOPMENT

attention to economic interests, man seems sometimes to have become an economic animal, who will be prudent, nevertheless, if he takes due precautions to assure his spiritual well-being." Another extremely important point about the relationship between population and production was made by James Steuart, a contemporary of Malthus. Steuart claimed that the problem of agricultural improvement was not merely a problem of man's ability to produce but, more important, the problem of man's wish to produce. If Malthus saw the limitation of population growth, or rather the misery attending it, as the result of man's inability to raise production at a steeper rate than population growth, Steuart saw it as the occasional absence in man of the wish merely to increase production. Steuart used the term "effective demand" or "effectual demand", to distinguish it from simple demand. He claimed that there is always demand, but only such demand as has something to give in exchange will be answered. In other words, Steuart believed that the farmer may be content to produce as much as he needs for the subsistence of his family, without exerting himself beyond this. For this reason, he will be neither inventive nor keen to improve his method of production except when he is under extreme pressure to do so. With the growth of towns, however, where manufacturers produced something that could be exchanged for agricultural products, farmers became increasingly inclined to produce a surplus to exchange for the urban products they desired.25 In other words, increasing productivity in agriculture depends upon, or is at least closely related to, increasing productivity in manufacture. If the incentive for greater agricultural productivity is really more crucial than the mere ability to produce more, it follows that 25

The Growth of the Greater Cities of Europe since 1800 (in millions of population) 1850 1900 1950 1800 Moscow 0.3 1.2 4.1 0.2 Leningrad 0.5 1.4 3.2 0.2 London 4.5 3.3 2.4 1.0 Berlin 3.2 0.2 0.4 2.7 Paris 2.7 2.9 0.5 1.0 Vienna 0.4 1.7 1.8 0.2 Rome 0.2 0.5 1.7 0.2 Source: Warren S. Thompson, Population Problems (McGraw-Hill, 1953), p. 389.

POPULATION TRENDS

35

only a rate of industrial production which can produce sufficient surplus t o exchange can really stimulate agricultural production. From a wider point of view, the variety of impediments presumed t o hold back agricultural progress becomes less puzzling. I n Steuart's view, farmers are always sufficiently intelligent to realise their own best interests. Moreover, they will acquire and use new instruments, inputs and techniques for raising their productivity whenever they have good reason and enough savings to do so. In ancient Roman society, farmers received nothing in exchange for their surplus product; the rich people and the towns followed a parasitic existence and exploited the masses of farmers, whose efforts t o increase the yield must consequently have been very rare. Moreover, even if the wish to make such an effort had been there, the money required for turning the wish into action was not forthcoming. If farmers in ancient Egypt could provide a number of large towns with a high living standard, it was due to the excellent administrative and organisational methods of Pharaonic exploitation. Thousands of people were made t o work on land of more t h a n average fertility, at the highest level of efficiency then known, and the combined effort was just enough to produce the necessary surplus. Each worker produced something more than he needed t o survive, and all these "little somethings", when skimmed off, amounted t o a good deal; sufficient to feed the collection apparatus and the parasitic towns. There was certainly little in this to encourage farmers to apply their minds to new ways for increasing output. Moreover, even had they wished to do so, the fact t h a t the surplus product was taken away from them and nothing given in exchange, would have prevented them from purchasing or making the inputs or equipment by which production could have been increased. I n other words, it may well have been the social and political environment which prevent e d progress in these empires. Rome was a great centre for receiving the surplus production of the Empire, but it gave nothing in exchange. Despite the fact t h a t Rome had capital, the labour force, land and men of enterprise, she never developed an industrial revolution. H a d ancient Rome been a productive city, had she produced goods which could be exchanged for food, and had she not deprived the farmers of the extra product which they could have given in return, an industrial revolution might perhaps have taken place some fifteen hundred years earlier than it did. However, 3*

36

AGRICULTURE A N D ECONOMIC DEVELOPMENT

this is not the way to discuss history, for historians can only explain what happened, and not what did not. Some historians explain the fall of the Roman Empire in terms of population movements — the invasion of the barbarians. Others explain the crusades as part of a huge population movement in the other direction, a movement of Europeans formed by population pressure to look for new lands in the East. This view is sometimes supported by actual evidence of population pressure, and by the observation that the crusades constituted one of the less important branches of the contemporaneous movements of people from what used to be the world of the old Roman Empire eastwards into the forests of present-day Germany and Poland. In short, then, without some measure of capital accumulation for improving the yield of the land, and without the incentive of manufacture and industrial production to exchange for agricultural products, a surplus of population relative to the land tended to drive people towards occupying new land which had not been previously used for cultivation. As soon as the limits of such possibilities were reached, the old relationship between land and people returned and accretion was slowed down or altogether terminated by the celebrated Malthusian checks. Yet with the growth of towns in many parts of Europe, exchangeable goods were produced and agriculture began to undergo a change. Already in the 16th and 17th centuries, towns had effected a very profound revolution in farming practices in the Netherlands and in Southeast England.26 Farmers began to produce crops less in accordance with what they needed for subsistence, and increasingly with a view to selling them for cash. They discovered that some crops could be sold in nearby towns at prices which permitted them to purchase more than they needed of other subsistence crops. Consequently, they began to specialise, and specialisation is already the beginning of improvement. Then, once prices had become the crucial factor in decisionmaking, agriculture was well on the road towards a more productive system and the way towards even greater improvement was open. In 19th-century Europe, population pressure led to two or perhaps more simultaneous processes which throw some light upon the * For a very good detailed description of this change see Slicher van Bath, The Agrarian History of Western Europe A. D. 500—1850 (English Translation, London, 1963).

37

POPULATION TRENDS

relationship between population growth and agricultural productivity. The first and least important was the search for new land outside Western Europe, to be cultivated by the familiar methods. I n this way, Europeans settled in North America, Argentine, Australia, New Zealand, South Africa and other parts of the world. 27 The emigrants brought with them techniques which had been developed in Europe under conditions of high population pressure, and used them on more fertile land. This not only enabled them to feed themselves adequately, but also t o produce a surplus which they sold to feed Europe, from where they received industrial products which they found difficult to produce themselves. The second process by which the food problem was solved in Europe was the removal of surplus labour t o the towns. This, though only slightly ameliorating the effects of population growth, concentrated in the towns a labour force which increased the number of customers for farmers' surplus products. I n turn, this concentration increased the incentives for even greater surplus production on the farms, while at the same time augmenting t h e production of exchangeable manufactured commodities. The third and most important process which helped t o feed Europe's growing population was the intensification of agriculture. Since prices had become the decisive factor regulating production and specialisation had increased, farmers no longer produced t h e things they directly required, but produced what they could grow best with the land and materials available. This sufficed to raise output considerably, but with surplus labour available which could be employed in land improvement, productivity rose even further. Eventually, the growth of towns and the specialisation of labour within them also enabled production of the equipment which farmers needed for their new methods. For example, one difficult 27

Total of foreign-born people in the U.S. Year

People

Year

1860 1860 1870 1880 1890

2,244,602 4,138,697 5,567,229 6,679,943 9,249,660

1900 1910 1920 1930

People 10,341,276 13,615,886 13,920,692 14,204,193

Source: U. S. Department of Commerce, Historical Statistics of the Colonial Times to 1957 (Washington, 1960), pp. 7—8, 56—66.

U.S.

38

AGRICULTURE A N D ECONOMIC DEVELOPMENT

problem in farming has always been t h a t of seasonal fluctuation. There are long periods when little labour is required, and others when the farmer can seldom get enough of it. The growing towns and their ability to supply labour-saving equipment helped t o reduce these difficulties. I n the 17th century, farmers frequently decided upon the area they were going to plant each year in accordance with the amount of labour which they expected t o be available at the peak period. This became less necessary in the following century. By then, farmers were often more concerned with t h e supply of equipment capable of replacing labour in peak periods t h a n with labour requirements, which became less of a restraining influence upon decisions concerning the area of cultivation. I n the 19th century, this process of more intensive use of land and the supplementation of labour by equipment had already developed so far t h a t two distinct trends became discernible. I n Europe, which was relatively densely populated and where t h e shortage of land appeared to be the main constraint on agricultural production, many of the new developments came in the form of improved land utilisation. I n America, where t h e population was relatively scarce and the main constraint on agricultural production appeared t o be the lack of labour, greater efforts went into labour-saving equipment. 28 To these two separate trends of agricultural progress we shall return in more detail later on. For the time being, we should remember t h a t both the improvements in land utilisation and t h e increasing productivity of labour were closely connected with t h e progress of industry, t h e growth of markets and rising incentives. I n other words, it seems fairly obvious t h a t the development of agriculture is closely connected with the development of manufacture and industry, and must therefore never be entirely separated from it. I n short, the problem of raising agricultural production to match t h e requirements of an increasing population may well be firstly, t h e problem of the wish t o increase production, i.e., t h e existence of an effective demand; secondly, the possibility for farmers t o earn sufficient from their surplus production t o be able t o purchase the inputs necessary for raising their output. 28

For a fuller discussion see Y. S. Brenner, A Short History of Economic Progress (London, 1969), Chapters I and III.

POPULATION TRENDS

39

This leads us to ask, by how much would output have to increase t o match population growth? A simplistic answer would be: byno less t h a n the rate at which population is increasing. If it can be shown t h a t population increases in most underdeveloped countries by approximately 2.5 per cent per annum, t h e simplest answer would be t h a t agricultural production must also increase by 2.5 per cent per annum if living standards are t o be maintained. 29 However, this is incorrect. We have seen t h a t agricultural development is strongly related to the growth of a manufacturing industry which gives farmers the necessary income incentive and equipment for better production. I n other words, agricultural production would have to rise by more t h a n 2.5 per cent to supply raw materials to the manufacturing industry and to feed its labour force. A conservative assumption may put the requirements of such a manufacturing industry initially at no more t h a n one per cent. I n this case, agriculture would have to progress at 3.5 per cent annually. 30 However, if the standard of living of the people should at t h e same time be raised by, say, one per cent, agricultural production may well have to rise by an additional percentage of between 0.3 and 0.8 according to the elasticity of demand for food, because much of t h e higher incomes would be spent on food. 31 Thus, it appears t h a t 4.5 per cent of growth must be the initial target for agricultural take-off. Yet this estimate is still conservative and does not take into account two additional very important factors. Firstly, it does not include a margin for rising per capita 28 During the decade 1966—65 populations increased at the following rates (per cent): Libya 3.5; Guatemala 3.1; Republic of Korea 2.6; Mexico 3.4; Venezuela 3.6; Thailand 3.0; Taiwan 3.4; Syria 3.1; Brazil 3.0; Honduras 3.1. F . A . O., op. cit., p. 17. 80 There are usually considerable differences in growth rates of foodstuffs and of industrial materials from agriculture. For example, cotton production in Latin America and the Near East declined in 1966 while total production remained almost uneltered. Hence, it may be assumed that food production increased by the difference. For more data, Vide F. A. O., Ibid., Table II—3, p. 17. ,l T h e concept "elasticity of demand for food" relates changes in income to changes in expenditure distribution. Hence, in poor countries a greater part Of additional income will be spent on food than in rich countries where increases in income will only slightly raise the demand for food. For a fuller explanation, Vide Edith H. Whetham, The Economic Background to Agricultural Policy (Cambridge, 1960), Table I: Income-elasticity of Demand for Food, p. 10.

40

AGRICULTURE A N D ECONOMIC DEVELOPMENT

living standards; secondly, it does not include the effects of rising living standards and agricultural progress on t h e composition of the labour force, i.e., it does not allow for the fact t h a t rising living standards, at this level of national income, at least initially bring about a change in the population's age distribution in a way which increases t h e number of very young people who, for the time being, cannot be productively employed. The survival of more babies, which usually accompanies rising living standards, would therefore inflate the number of consumers of agricultural products without simultaneously increasing the number of producers. At the same time, rising living standards and better nourishment also enable more people to survive to a greater age, i.e., until they are too old t o contribute much to output but still continue to consume. Hence for some time at least, agricultural production would have to rise by no less t h a n 5 per cent annually to make t h e development of a poor country possible. The required jump in productivity is thus very considerable indeed. Trade is sometimes proposed as the solution t o t h e population dilemma. The supporters of this idea assume t h a t high productivity of labour and good utilisation of land in some of the most developed countries, such as Canada and the United States, can provide t h e surplus of agricultural produce necessary for filling the take-off gaps in underdeveloped countries. This argument is hardly reasonable. Firstly, it is difficult t o see how the developed countries can be convinced of the need, or can economically afford, to feed t h e ever-growing populations of underdeveloped countries. 32 Secondly, as soon as cheap or free foodstuffs become available in the underdeveloped countries, the farmers' incentives to produce more are diminished rather t h a n encouraged; yet such encouragement, as we have seen, is the most crucial element for real development. Thirdly, there is little t h a t underdeveloped countries can supply in exchange for surplus foodstuffs. 33 Modern industry is such t h a t it is not easy for underdeveloped countries to be competitive. Modern industries are highly capital-intensive and usually require a great 32 For the economic restraints on the volume of foreign aid actually available in developed countries, take 1 per cent of their combined national product and divide it by the rest of the world's population. For actual figures, see F. A. O., op. cit., pp. 44—46. 33 Only few underdeveloped countries have natural resources which suffice to pay for a large import bill. See UNCTAT papers.

POPULATION TRENDS

41

deal of skilled labour; neither capital nor labour is available to underdeveloped countries. This point will also be discussed in greater detail later, in connection with agriculture and international trade.34 Finally, reduction of population growth rates of underdeveloped countries — an idea which is frequently suggested by some experts and promoted by the Indian government, for example — is not certain to provide a solution to the problem, even assuming it to be possible in the face of social traditions and real requirements. Indeed, if half the population of a country disappeared overnight by sudden mass emigration, an atomic holocaust, or by some new disease like the Black Death, per capita output would perhaps be temporarily raised if the surviving population could retreat to the most fertile parts of the land, but there is no certainty of this. More likely, the remaining population would stay in places to which they were accustomed, and would merely enjoy a slightly higher standard of living for some time as the food they produced would be distributed among fewer people. This would eliminate some pockets of underemployment of labour, and give a number of people greater per capita yields. As a result, more children would survive. After a time-lag, their survival would cause exactly the same situation which had prevailed before the big migration or the holocaust. There can be no analogy here with events which took place in 14th-century Europe. Circumstances are different. That demographic disaster occurred in a period of rural progress in agricultural technology, and coincided with the growth of some urban centres which were quick to take up the extra agra product in exchange for what they had to sell. It took place in regions with reasonably good waterways and transport connections. This may not be the case in an underdeveloped country today. In fact, a diminution of population may not lead to social or cultural changes of a kind which could make a community more amenable to economic progress. To be sure, it would give some respite to the growing disequilibrium between the demand for food and its supply, but it would not change the situation in the long run. It is for this reason that the population arithmetic which makes per capita income a simple function of population statistics is nothing but an illusion. It is not the decline or increase of population which sets the relation84

See Part Π.

42

AGRICULTURE A N D ECONOMIC

DEVELOPMENT

ship between food's supply and demand, but the social and cultural relationships and the supply of capital and growth of markets which affect the equilibrium between population .growth and food production. The solution to the problem of development therefore can hardly be found in contraception. It has to be sought in the realm of incentives for production and in the availability of incomes to turn such incentives into actual improvements. That such improvements are possible can easily be demonstrated. In fact, a look at the growth of per acre productivity during the last thirty years in countries like Yugoslavia, Japan and Czechoslovakia illustrates the fact that each unit of land can be made to yield crops five or ten times greater.35 That the productivity of labour in agriculture can be improved is shown by the fact that in West African countries productivity is as low as 2.5 : 1, i.e. one agricultural worker feeds perhaps another man and a half, whereas in countries such as the U.S.A., England and Germany, one man employed in agriculture produces food for twelve additional consumers. Even in so-called densely populated countries there are still great areas of unused land which, with capital inputs such as fertilizers or water supply, can be productively exploited. The same applies to areas with shifting cultivation. There is no reason why, with some inputs and capital investments, these areas might not be used year after year. For example, only one-eleventh of the whole area of Ghana is cultivated in any one year; the possibilities for increasing production are self-evident. Finally, it is an observed fact that when incomes reach levels at which people no longer feel the need for the security arising from big families, and when the cost of having children begins to cut deep into family budgets, population growth abates to manageable numbers; this might reasonably discourage the popularity in some quarters of current Neo-Malthusianism. The problem is not one of rapid population growth, but of making agricultural production more effective. Effectiveness, however, is always a matter of incentive, which can only be stimulated by the growth of manufacturing and industry to produce effectual demand, i.e., goods which may be exchanged for those supplied by 35

For a c omparison of yields in India, Greece, Yugoslavia, Japan, Czechoslovakia and Denmark today, see Y. S. Brenner, A Short History of Economic Progress, p. 283; data based on United Nations Yearbook, 1964.

POPULATION TRENDS

43

the farmer. Only the freedom of farmers to retain directly or indirectly a sufficient share of their surplus product to be able to exchange it for manufactured goods and to reinvest productively in their farms can really solve the population problem in most underdeveloped countries today. This, then, is the crux of the population problem: how to get more production. Technically it can be achieved in two ways: by increasing yields per acre and by raising output per man-hour. Both will be discussed in the following chapter. So far as the relationship between population growth and progress in agriculture is concerned, both are so closely interrelated that they can be never really separated, even though there may be times when population growth will stimulate productivity and others when rising productivity will temporarily permit a greater accretion of population.

II INCREASING PER CAPITA OUTPUT IN AGRICULTURE AND THE PER ACRE YIELD OF FARMLAND

What is the meaning of "increasing per capita output?" Simply that a given amount of work is accomplished by the same number of workers in less time, or by fewer workers in no more time than was previously required; or, of course, a simultaneous reduction in the quantity of labour and time required for the job. Man-Hours Required per Acre and per Unit of Product in the United States1 1800

1840

1880

1900

Wheat metric ton per acre

1940

137 56

86 35

56 20

40 15

17 7.5

Maize metric ton per acre

135 86

109 69

71 46

58 38

33 25

2645 185

1932 135

1338 11 9

1248 112

840 98

1950-63 9.6 4.4 13.4 13.1

Ootton p.m.toflint peracre

581 71

At first sight, this appears to be of little concern for underdeveloped countries, at least for those with a high rate of disguised unemployed or underemployed labour. However, if it is remembered that the growth of industry is usually the prime source of incentive for farmers to exert their mental and physical capacity to increase production, it seems obvious that low per capita efficiency in agriculture can become a major constraint on development. The development of industry requires not only a reasonably good supply of 1

Source: Colin Clark, op.ext., Table X X I I I .

INCREASING OUTPUT A N D

45

YIELD

labour but also a steady supply of food and raw materials. Hence, unless t h e productivity of agricultural labour can be raised sufficiently to feed the rising number of industrial workers who can no longer produce their own food, together with the growing number of people concerned with transportation and marketing of victuals and the industrial machines which need agricultural materials for production, the whole process of development is likely t o be choked. Labour requirements, especially for services which accompany urbanisation and the growth of industry, are usually much higher t h a n the supply which may become available from a reduction in rural underemployment, unless output is seriously reduced. Assume, for instance, t h a t a country plans to industrialise at a rate a t which one percent of the labour force is annually transferred from farming to manufacturing. This would require at least an annual increase in agricultural labour productivity of one per cent for feeding industrial workers, plus the additional percentage rise in productivity required for the supply of farm-produced industrial raw materials; a further rise would be necessary t o compensate the loss of agricultural production due to the specific age composition and quality of those labourers most likely to move t o industrial employment and who usually come from the most productive group. Altogether, therefore, the difference between demand and supply of agricultural produce is unlikely to be made up by the rise in per capita production resulting from t h a t decline in rural underemployment of labour which assumedly accompanies labour movements from agriculture to industry. This applies particularly to countries with a high rate of natural population accretion, and t o those where it is t o be hoped t h a t the growth of industry will be accompanied by rising living standards. 2 Moreover, underemployB

The effect of rising living standards on the growth of demand for food will be discussed later. However, it may be instructive to examine the average annual changes in agricultural production in some underdeveloped countries in recent years (1952- 65) Country Libya Mexico Syria Cyprus U.A.R.

Agra Production Food Production (Average annual percentage change) 6.7 6.9 5.4 5.6 4.4 2.8 3.7 3.8 3.6 3.7

Population 3.5 3.4 3.1 1.2 2.5

46

AGRICULTURE A N D ECONOMIC DEVELOPMENT

ment of labour in agriculture is usually highly seasonal. Many communities which are faced with labour surplus during most of t h e year may be in dire need of extra hands during harvest time, for example. If these communities cannot count on the "underemployed" to fill this gap, they will be inclined to reduce their areas of cultivation. I n other words, underemployment in agriculture does not usually represent surplus labour throughout the whole year but only during most of the year, and its magnitude tends t o determine the size of the cultivated area. I n deciding what crop to plant, how much of it and where, the farmer usually bears in mind his labour requirements for the main labour-demanding seasons. H e will either plant as much as he can expect to reap with the labour normally available to him, or risk having part of his crop rot away or be destroyed. For this reason, the migration of underemployed labour to industry may have a restrictive influence on production, because farmers may decide t o plant less or will be unable t o handle the crops at certain seasons. I t follows t h a t even in regions suffering from a considerable amount of underemployment of labour, labour-saving equipment, i.e. equipment which can raise per capita output, may still be necessary to replace labour during the labourintensive seasons. I n addition, it is also a fact t h a t in many parts of t h e world t h e exploitation of the land cannot be intensified because of labour shortages, even though apparently they are subjected t o surplus labour. This paradox is the result of disequilibrium between t h e supply of labour and capital. The surplus of labour may be only relative t o the area under cultivation by prevailing methods, whereas with more capital and other techniques of production, t h e relative surplus may be converted into a shortage of labour. Surplus labour may be available but it may not be sufficient to allow effective bush clearing, terracing, drainage, or the construction of dams or canals which could actually increase the area fit for cultivation. This is particularly so when very powerful equipment

Peru 3.0 Iraq 1.7 Indonesia 1.2 Uruguay —0.1 Algeria —1.2 Source: F. A. O. op. cit., p. 17.

2.7 1.6 1.3 —0.1 —0.9

2.7 3.0 2.2 1.6 1.8

INCREASING OUTPUT A N D

YIELD

47

is required, as in deforesting. Moreover, there are regions where a good deal of underemployment exists during most of the year and where the surplus labour could be engaged in preparing new land for cultivation; however, this possibility is neglected because when t h e new land is used, t h e labour presumably would not meet the needs of both old and new lands in seasons of high labour requirements. Finally, legal impediments arising from the land tenure syst e m may prevent the utilisation of surplus labour. This may be an overstatement of the problem, of course; in many instances, surplus labour in off-seasons could in fact be more rationally utilised. This very complex problem will be discussed later in connection with incentives and marketing. I n areas where labour shortage clearly restricts output, the need for better equipment is self-evident. Historically, this was the case in North America during the 18th and 19th centuries. Even today it still applies in Canada. North American farmers were among the first to concern themselves with the restrictions imposed upon them by labour shortages. For this reason, America was the first country t o make wide use of mechanisation in agriculture, i.e. it was the first region in which mechanical equipment was used on a large scale to make good the shortage of agricultural labour. If the amount of work a man can do with a sickle in a given time is compared with t h a t of a combine harvester in the same time, t h e value of mechanical equipment for raising per capita output is so obvious t h a t its advantages need no further elaboration. I n 19th century Europe, where labour was abundant in relation t o land, progress in the utilisation of labour-saving equipment was much slower. I n fact, only labour-saving equipment which could reduce seasonal labour shortages was widely used in the early part of the mechanisation process. I n many cases, labour-saving equipment which had been invented in Europe was first used in America; it returned only later to its country of origin when temporary labour shortages made this necessary. A very good example of this can be taken from the period of the Napoleonic wars; acute labour shortages in England during the threshing season caused a threshing machine, originally developed in England but used commercially only in America, to be returned to England to compensate the labour gap. This example is better known than many others because threshing kept a good deal of English rural labour occupied during winter months when little other farm work was available. Obviously, the

48

AGRICULTURE A N D ECONOMIC DEVELOPMENT

machine became a cause of unemployment when the wars were over; discharged soldiers found t h a t their services were no longer required during the winter months. This gave rise t o considerable labour unrest, culminating in the well-known machine-smashing episodes and the subsequent civil disorders which spread into the cloth industry. 3 Hence, an important point to bear in mind is t h a t once a market economy begins to develop, the problem of labour shortages, particularly during labour-intensive seasons, becomes increasingly acute. As a rule, market crops require more labour t h a n subsistence crops, and fluctuations in their labour requirements are even more unstable than those occasioned by seasonal variations. Many commercial crops need careful treatment such as weeding and grafting; this is time-consuming and sometimes also requires a growing rate of expertise. For this reason, wherever much labour is needed for subsistence crops grown next to and in addition to cash crops, labour shortages will occur and will detract from both t h e value and quality of the latter. Normally, farmers in underdeveloped countries where the transition from subsistence farming to cash-crop production is taking place, realise this problem and develop their own techniques for solving such labour problems. For example, they plant cash-crop trees close to each other; this provides shade which prevents the proliferation of much undergrowth and thus saves the labour required for weeding — labour they are often unable to spare when it is most needed. 4 But planting trees in close proximity usually results in poor crops and the rapid spreading of plant diseases. This not only brings losses but also has a strongly demoralising effect on farmers, sometimes even reducing their incentive t o go on producing cash crops. Obviously, most of these labour deficiencies could be remedied by the introduction of fairly simple equipment which might overcome specific problems without risking an increase in underemployment. Indeed, rather than inflating underemployment, such equipment might liberate part of the labour force to produce crops 3 For a more detailed description of the spreading of labour-saving equipment in Europe see Y. S. Bienner, A Short History of Economic Progress, pp. 16 17. 4 Vide Y. S. Brenner and H. Wagenbuur, "The Ghanaian Lime Farmer" (Cape Coast, 1968), mimeographed.

INCREASING OUTPUT A N D Y I E L D

49

more financially rewarding than subsistence crops. Unfortunately, however, labour-replacing equipment has its cost, which can only be justified if the farmer actually stands to gain from it, and if he is already sufficiently affluent to make the purchase. A frequent complaint against farmers in some countries is that they make too little use of animals to supplement human labour, in situations where animals cannot only substitute for human work but also improve on it. Sometimes these arguments are sensible and justified, more often they are not. Animals have to be fed, and it is only where the additional output which they produce and the manure they provide are greater than their cost and the cost of their food, that it can be said that the farmer who does not make use of animals is not acting in his own interest. In other words, the utilisation of animate power to improve per capita output hinges upon the farmer's ability to produce with it a surplus product which is greater than what the animals need for survival. This may be possible in places where farmers have sufficient and consolidated land, but not where holdings are poor and the possibility of increasing output sufficiently to feed both animals and men is doubtful. The problem becomes even more complicated if we remember that in many parts of the world disease makes the use of animals very risky if not totally impossible. Finally, often the farmer must already have a good income to be able to acquire an animal, and here the sequence of events may well be the main barrier to progress. Even where the animal could help to increase the farmer's surplus, the reward only comes after the animal has been in use; but in most cases, payment for the animal has to be made in advance of the expected results. In this wellknown vicious circle where poverty leads to poverty and affluence opens the door to greater affluence, the money-lender may be the solution; however, the great risk involved in lending under the prevailing circumstances causes interest charges usually to be so exorbitant that they take away too many advantages from any anticipated improvements. The use of inanimate-powered mechanical equipment is naturally a great step forward as it does not directly compete with man for food. Yet here too, the difficulties are considerable. In the first place, equipment has to be purchased, then it has to be maintained, and finally it has to be fed with oil or petrol which can only be bought for money, and this most farmers in subsistence economies do not have. Worse, obtainable equipment may not always be 4 V—93

50

AGRICULTURE AND ECONOMIC DEVELOPMENT

suited to the work.5 Yet on the whole, and in spite of reservations, mechanical equipment can replace labour, can increase the amount of labour available for hitherto unexploited production opportunities, and can liberate farmers from the constraints which seasonal fluctuations in labour requirements impose upon their ability to increase their output. Finally, it is self-evident that once the productivity of land is raised, the need for labour will increase so considerably that present surpluses will hardly suffice to satisfy the new requirements. Hence, although at first sight one may gain the impression that the problem of raising the per unit yield of land is the more pressing issue in the face of current population accretion, it must be realised that raising per capita output of labour is of equal importance, because a new kind of land utilisation capable of raising per acre yields requires much more labour than is hidden behind the levels of underemployment and the 2.5 per cent annual natural accretion. The difference between the amount of labour required by traditional subsistence farming and the amount needed for intensive agriculture is so great that unless it is made up by better equipment capable of increasing man's per capita productivity, improvements in land utilisation will soon be frustrated by labour shortages. Moreover, if the whole process of development is closely connected with the growth of industry and markets, progress in agricultural production will of necessity be accompanied by migration of people from agriculture to other employment. Their loss to agriculture will have to be compensated by the substitution of equipment for labour if agriculture is to be prevented from becoming a major obstacle to industrial growth. In fact, the more an underdeveloped economy develops, the more the constraint of insufficient labour becomes evident. For example, better irrigation may require the construction of dams or canals, 6 There is a very illuminating historical precedent for this kind of situation. Ancient Rome tried to introduce its own kind of plough, the carruca, in North Africa where previously the aratrum, a Phoenician kind of plough, had been in use. The carruca was a heavy plough drawn on wheels, useful for turning the land over, and was, so the Romans thought, a great improvement on the aratrum which had just a number of prongues for scratching the soil without upturning it. The result was disastrous. The equipment which was suitable for tilling heavy soils did not suit North African agriculture with its light soil and different climatic conditions.

INCREASING OUTPUT A N D Y I E L D

51

both of which may need a great amount of labour only available at the expense of less farming. Moreover, when an economy reaches the stage when it can engage in the processing of foodstuffs, or when it begins a marketing system, the amount of additional labour for services etc. becomes surprisingly large. The development of any cash economy is always closely related to improvements in the transport and storage systems, i.e. the construction of roads, feeder roads, waterways, maintenance yards, silos, stores, etc. For this reason, most progress is accompanied by a growing demand for labour. The movement of labour from farming to the non-agricultural occupations mentioned earlier will therefore increasingly shorten the supply of foodstuffs and agricultural raw materials if it is not avoided by the utilisation of better labour-saving agricultural equipment. The fear that the introduction of labour-saving equipment, as distinct from better yield-raising inputs, may increase agricultural unemployment rather than improve things, is therefore shortsighted to say the least. The truth of the matter is in appearance paradoxical, because labour-saving equipment may reduce rather than increase underemployment of labour. It may well be the absence of such equipment that prevents the apparent surplus of underemployed labour from finding alternative fuller employment. The problem of labour-saving equipment is therefore not one of general desirability or undesirability, but of selecting the kind of equipment which can best be introduced at different times and stages of development, and of deciding at what rate it should be introduced and how it can be paid for: of selecting the kind of equipment most suitable for a particular area, at a particular time, and for a particular purpose. From this point of view, the raising of per capita output is a very complicated matter, the details of which can perhaps be solved only by the farmers in a slow process of adjustment by trial and error.® Most labour-saving devices in use before the end of the 18th century were badly constructed and hardly suitable for their purpose. However, they already contained most of the basic ideas which were later developed. In fact, their development depended upon the progress in craftsmanship in the metal industry and the availability of cheaper and better cast iron. Moreover, it was the

• This will be discussed in more detail later.

A*

52

AGRICULTTTEE A N D ECONOMIC DEVELOPMENT

progress made by industry after the introduction of steam as a source of energy which gave agriculture the kind of equipment and materials necessary for its subsequent spectacular development. Pipe drainage and such additives as basic slag, superphosphate and artificial fertilisers which revolutionised agricultural methods of production, were all by-products of industrialisation. The details of industry's contribution to farming are too many and too complex to be listed here. Those which ought to be mentioned are the small iron-framed plough, which could be used with fewer draught animals than its heavy predecessor and in the last decade of the 18th century was fitted with self-sharpening blades, and the cultivator, a horse-drawn set of parallel iron wheels with strong curved prongs, very useful for ploughing and clod crushing. Other innovations worth mentioning were the improved adaptation of seeddrills used for spreading light seed and manuring, and the horsehoe which replaced the many single-row hoes. Machines which spread from America to Europe in the late 19th century included the reaper invented in 1848, and the mower invented in 1856. Nowadays, the number of tractors in relation to population or cultivated land, is taken to be a rough indicator of the rate of agricultural mechanisation and of the relationship between traditional and modern labour utilisation. Although tractors vary greatly in performance, weight and power, the following data give a fairly good picture of the different states of agricultural mechanisation in a number of countries.7 It is thought that 13—14 million tractors were in use throughout the world in 1965. Of these, less than 5 per cent were used in developing countries, two-thirds of them being concentrated in Latin America (mostly in Argentine, Brazil and Mexico).8 In the entire People's Republic of China, no more than 135,000 tractors were reported in 1965. Yet a clear trend towards greater tractor utilisation has become evident in recent years in developing countries; tractors are now being produced, or at least assembled, in Algeria, Argentine, Brazil, India, Iran, Mexico, Pakistan and the United Arab Republic. Total production in these countries may not be very impressive — it hardly exceeds 35,000 tractors per annum — but ' For details see F. A. O., op.cit., p. 47, Table Π—5. * Latin America 515,000; the Far East, excluding Japan and mainland China 88,000; the Near East, excluding Israel 107,000; and Africa, excluding South Africa 99,000.

INCREASING OUTPUT AND YIELD

53

as an indicator of the trend of things to come it is a good sign. Less fortunate, however, is the fact that many tractors in developing countries may not be fully utilised, or may even stand idle altogether because of spare part shortages and the reluctance of foremen to cannibalise broken-down equipment, even though past repair, to provide spare parts.9 In short then, the mechanisation of agriculture and the replacement of labour by machines has begun in several underdeveloped countries, is making modest progress, and gives some cause for hope for the future, even though the rate at which it is progressing is far below that required. This is particularly true for regions with a relative surplus of land, where mechanisation is required to liberate surplus agricultural labour which should and could be absorbed in manufacture and industry. It is significant that in Western Europe, where the density of population is about 91 people per square kilometer, there are approximately 42 tractors in use per thousand hectares of arable land, whereas in North America, where the density of population is reckoned at only ten persons per square kilometer, tractors in use per thousand hectares of arable land number only 23.10 This comparison shows that in the more densely populated areas rather than in the less densely populated ones, labour has been most successfully replaced by mechanical equipment, without causing unemployment. In Japan, where density of population per square kilometer is reckoned at about 267 persons, there are four heavy tractors per thousand hectares of arable land. However, this figure is very misleading because it does not take into account the so-called garden tractors, which in Japan are most commonly used in agriculture and of which more than 2.2 million were in use in 1964. In the whole of Asia, excluding the Soviet Union and Turkey, density of population is calculated at 68 per square kilometer, i.e. almost 25% less than in Europe, but there is less than one tractor per thousand hectare of arable land. In Africa, where density of population is about 11 persons per square kilometer, tractors number perhaps one for two thousand hectares of arable land, if the Republic of South Africa is excluded. In Latin America, • The administrative problem of freedom to make decisions of this kind will be discussed later in the chapter on social and cultural impediments t o growth. 10 Vide United Nations Statistical Yearbook, 1967, p. 26, and F.A.O., op. cit., p. 47.

54

AGRICULTURE A N D ECONOMIC DEVELOPMENT

with 12 persons per square kilometer, somewhat more t h a n North America which has only 10, tractors per thousand hectares of arable land number about 5.5. I t may be concluded, therefore, t h a t the use of modern mechanical labour-substituting and work-improving agricultural equipment increases with the density of population, wherever this higher density is accompanied by rising living standards. Consequently, the simplistic view t h a t population growth should not be accompanied by the introduction of more laboursaving equipment because this may lead to more underemployment or unemployment, cannot be substantiated. Underemployment in the long run is seldom the result of labour-saving equipment; more often t h a n not, the absence of such equipment prevents labour from seeking other non-agricultural employment and thus raising both the productivity of the area under cultivation and the work done upon it. The second aspect of the problem of increasing agricultural output is t h a t of raising per acre yields of available land. The need for this seems obvious. While there may be some hesitation in recommending labour-saving equipment to overpopulated countries, there is seldom any doubt about the desirability and indeed the necessity of improving the per acre yield of land. The best-known recommendations for this purpose are those advocating the wider use of fertilisers, pesticides, higher quality seed and seedlings, and of course, the more adequate supply of water or drainage as the case may demand. This is the solution. The problem which remains to be solved, however, is how to get farmers to apply such methods and how to find the money to do so, and finally how t o optimise the effort. Let us begin with the best publicised aspect of the problem — water supply, which entails a whole complex of necessary decisions and choices. For example, whether it is relatively more advantageous t o bring water to land which is already cultivated with poor results because of water shortage, or whether it may not be preferable to bring water to land which has never been exploited because of lack of water — assuming, of course, t h a t finance and labour are available for either proposition and t h a t their cost is comparable. Similar alternatives may arise regarding the use of fertilisers. For example, should superphosphates be recommended because they are easily applicable, or should a combination of N.P.K, (nitrogen,

INCREASING OUTPUT AND

YIELD

55

phosphates P 2 0 5 or potash K 20 ) be used, or none at all ? With seed t h e problem may even be more difficult, because it is necessary to know which seed is best in the particular circumstances, at what period and where. Should local varieties which the farmer has been using for a long time be improved, or should new kinds of seed or seedlings which have been successfully used elsewhere be introduced ? Is a good pest-resistant seed with a low yield preferable to a less resistant one with a higher yield? Should one, to prevent loss of crops from rodents, weevils or fungi, invest in pesticides or in silos ? There is seldom a universally acceptable answer. Each particular case has its specific facets which must be tested, studied and examined in relation to the farmer's environment, habits and adaptability t o change. I n addition, the various other facilities which the farmer can use for obtaining the best possible results from the new inputs must be taken into account. I n fact, a matrix with columns and rows could be drawn up for each of the various available inputs, t o see which combination turns out to be the most useful in each case. This may indeed be necessary, because it has become increasingly clear t h a t a combination of small quantities of several inputs is usually preferable to concentration on one or two specific inputs in larger quantities. The results of a combined use of water, fertilisers and pesticides usually outweigh by far the mere arithmetical combination of the value added by each of these inputs alone. In short, there is frequently a greater advantage in using smaller quantities of a variety of inputs than larger inputs of only one sort. This is particularly true if cost-benefit relationships are measured in large-scale schemes — in schemes, t h a t is, which are too expensive for farmers or even farmers' cooperatives to undertake themselves, and have therefore to be undertaken by the state or other agencies. I t may even be true to say t h a t a variety of small inputs in traditionally cultivated land usually leads to much better results in terms of output and profitability than large-scale irrigation schemes for new land. 11 Moreover, such schemes are normally less difficult t o put into practice from a social point of view. To begin with water.The first problem which has to be considered is t h a t of assessing the quantity of ground water, the rate of salin11 There are of course some very significant exceptions — the case of Egypt may be one of them.

56

AGRICULTURE AND ECONOMIC DEVELOPMENT

ation, or of watershed management where surface water is available. These "pre-distribution" problems are all too frequently neglected in underdeveloped countries and create considerable difficulties when it is too late to do anything about them at any reasonable cost. Less neglected are the problems concerned with the following stage in the sequence of steps necessary to introduce a proper water economy. These are concerned with the storage and distribution of water, with dams, wells, waterholes and so forth. At this stage, success depends upon a great variety of local conditions. For example, dams can be constructed in many places, but only in areas which are sufficiently populated and where the population is or can be organised, will their construction also be economically justified. The degree of economic efficiency of a dam or water reservoir hinges upon whether or not sufficient farmland is nearby, whether enough people can share in the advantages, and whether the people are sufficiently numerous and socially and economically developed to supply labour for the construction of diversions, canals etc., for the proper distribution and utilisation of the water supply. Sometimes the absence of labour can be made up by capital supplied by the state or other agencies, but even then it is very important to make sure in advance that the farmers will be able to make profitable use of the water. Sometimes farmers can dig their own wells or sink waterholes at little expense if the location is suitable; if they do not take advantage of this possibility, it is less the result of ignorance than of their lack of real economic incentive to do so. The third type of problems related to water management, again too often neglected by over-enthusiastic water economists, concern the utilisation of the water supply. While it is fairly easy to construct a dam, it is much more difficult to regulate orop irrigation efficiently if farmers are not really familiar with modern practices or do not understand the specific requirements of their crops, the climate and the quality of their land.12 Once again, there are no universally applicable rules. The answer always depends upon the specific natural conditions and human situations, upon the individual crop, the quality and availability of labour, 12

For more details see Millikan and Hapgood, op.cit., pp. 37—43, and Chart No. 1. On large-scale irrigation projects, see the various papers on t h e Nile (Aswan) project, as well as on the Volta, Niger, Ganges, Brahmaputra, Muhong and Mekong schemes.

INCREASING OUTPUT AND Y I E L D

57

and the combination of the other inputs which can be used along with the improved water supply. Yet even assuming that optimal utilisation can be achieved, it may not even then solve the agricultural problem. Greater yields without transport facilities, storage space and a suitable marketing organisation, i.e. without the necessary distribution system, may merely increase the quantity of crops destroyed by decomposition and pests, or depress market prices to a level which will make farmers even poorer than they were before their yield increased. Altogether, therefore, the problem of water economy is considerably more complex than indicated here, and has always to be discussed in close relation to specific circumstances. Without this no reasonable guidelines for practical purposes can be laid down. The promotion of wider use of chemical fertilisers to increase the output of land brings no fewer problems than does water management.13 Most farmers in underdeveloped countries are familiar with the value of organic fertilisers. They are aware of the advantages of manuring the land when manure is available, and they practise a kind of green manuring, fallow farming and rotative cultivation.14 The problem of promoting the use of fertilisers is therefore less difficult than it appears insofar as convincing farmers of the advantages is concerned; it is more difficult in practice, because without a certain level of literacy and some understanding of the nature of modern chemical fertilisers, their utilisation may not yield the expected results. On the whole, the use of chemical fertilisers is often considered the crucial element in agricultural development and the key to solving the food problem. It seems fairly obvious that the advantages accruing from the correct use of fertilisers in terms of output are very considerable and may, at least for some years, raise the production of food and agricultural raw materials sufficiently to close the gap between the rate of growth of agricultural production and of population accretion. Unfortunately, it is also true that the F o r the production of fertilisers in recent years vide F . A . O . op.cit., p p . 46—47, and U. N. Statistical Yearbook, 1967, p. 205. 14 The Ghanaian farmer's habit of letting the bush grow for several years before he returns to a given piece of lend is 8 kind of manuring, though much of its potential value is lost because he h a s no choice but t o burn the bush rather than plough it in when he comes to cultivate the plot. u

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AGRICULTURE A N D ECONOMIC DEVELOPMENT

advantages arising from wider use of fertilisers are only large where productivity of land is very low. Therefore, their use can only be considered as a short-term solution if not accompanied, at least after some time, by improvements in other agricultural inputs. Even more important is the fact t h a t utilisation of fertilisers requires some knowledge and skill which may not be available to the average farmer, particularly in areas where the use of fertilisers could make the best contribution. Crops usually need a specific combination of nutrients: a certain amount of one nutrient, say nitrogen, a smaller amount of phosphate and a medium amount of potash. If the crop is to be increased by 100 per cent, the quantities of these nutrients have to be increased accordingly; however, soil production differs and the composition of the nutrients will have to be varied with each new stage of cropping. Sometimes the mixtures have to be varied, while at times it may be sufficient to add one nutrient instead of the combination. Hence, only farmers who can get the necessary advice from soil and crop experts can take full advantage of fertiliser practices; alas, such experts are a very scarce commodity in poor countries. Moreover, illiteracy may cause difficulties in t h a t farmers may not be able t o read the markings on t h e bags. 15 I n recent years, the use of chemical fertilisers has risen by approximately 7 % per annum. B u t again, most of the increase has taken place in the developed countries. I n fact, all the underdeveloped countries together did not use more than 10 or 12% of the total fertilisers produced in the same years. About 90% of all fertilisers produced was used in Europe, Australia, North America and t h e U.S.S.R., which taken together account for just over 18.75 million square miles, whereas the remaining 10% of fertiliser production was used in Africa, Latin America and Asia, t h a t is, about 35.8 million square miles of the world's surface. I n terms of population, 90% of the fertilisers were used by the 916 million people living in North America, Europe, Oceania and the Soviet Union, and about 10% by the 2,436 million living in the less developed countries.1® The theoretical possibilities for using fertilisers as an instrument 15 The author remembers an occasion when a certain State Farm in Ghana was supplied with a large quantity of chemical fertilisers from Russia in unmarked bags which puzzled even farm experts and made them hesitate whether or not to use them. 16 Data from F. A. O., op. cit., and U. N. Statistical Yearbook 1967.

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59

for raising the world's agricultural output are self-evident. The highest consumption of fertilisers per hectare of arable land took place in Japan, where in 1966 319 kilos of chemical fertilisers were used per hectare of arable land, as against 130 kilos in Western Europe and 52 kilos in North America; in all the underdeveloped countries together, the average per hectare use of chemical fertilisers was no more t h a n 7 kilograms. Thus, while production is fairly cheap, requiring no more t h a n about £10-£15 million capital per 100,000 tons of a mixture of fertilisers, distribution and promotion of proper use is very costly indeed and much more difficult. 17 Firstly, there is the difficulty of distribution, of taking the fertiliser t o where it is to be used. This may be called the transport and planning bottleneck. Secondly, storage and the timing of distribution. If it does not arrive on time or is poorly stored, it may lose most if not all of its value t o the farmer. Thirdly, there is the supervision and management problem, ensuring its economic distribution. Fourthly, the land tenure and crop sharing difficulty. The question here may be whether it is worth the farmer's while to use fertilisers when benefits may not accrue to him, or whether the landowner is yet ready t o risk the investment. Fifthly, there is the impediment of habit, the traditional hesitation of farmers to t r y new ways; and finally, the actual lack of money to pay for the new inputs. 18 Above all remains the great question of whether farmers can be certain of markets in which to sell the extra produce at a reasonable price. Thus, as in the case of other inputs, the problem is not merely one of physical inputs and their extremely valuable contribution to farming, but a far more complicated one starting from the organisation of supply, continuing with the farmer's natural and cultural environment, and ending with his problems of marketing and 17

Millikan and Hapgood, op. cit. p. 35, make the following estimate:

"per 100,000 tons Ν $15,000,000—$20,000,000 per 100,000 tons Ρ $ 5,000,000—$10,000,000 per 100,000 tons Κ N o processing required per 100,000 tons mixed $1,000,000—$1,500,000" where the cost of blending plant, $1,000,000—$1,500,000, has to be added to the fertiliser production plant costs mentioned earlier. 18 There are many more problems which can hardly be mentioned here, such as that of using chemical fertilisers where sheet-flooding is common during tropical rain periods.

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financial incentives. The whole development of the economic system cannot be separated from the better use of one given input, just as the use of one given input will usually not progress except in step with other developments. The same problems arise in connection with the utilisation of new varieties of seeds or seedlings. This may be even more complicated and wedded to social and economic retardation than is the use of water and fertilisers. Farmers are acquainted with the advantages which can be gained from a better water economy, and can adjust fairly easily to relatively simple modes of fertiliser application. This is hardly the case with new seed and plant varieties. Above all, farmers tend to be cautious. They are accustomed to some kinds of seed and know what yields may be expected from them. Adding water is a fairly obvious procedure. Fertilisers, at least initially, do not interfere with their usual farming practices and therefore may not create particular problems of adaptation. The use of new kinds of seed and plants raises a very difficult mental problem, requiring farmers to give up something they know and replace it by something unknown. Something new takes the place of the old and tested instead of merely being added to it, as in the case of water and fertilisers. Moreover, farmers very often develop a special strain of a plant or select a kind of seed which is particularly suited to their conditions, either from the point of view of land and climate or from that of economics. A farmer may have adopted a kind of maize that is advantageous not only because its colour, appearance and taste are preferred by local consumers, but also because it may have a firm shell. Although another strain may give twice the yield and have the same colour and taste as his habitual one, and therefore be apparently more suitable, it may have a less firm shell and so be more prone to attacks by weevil or other storage pests. In this case, the farmer would do better to grow the low-yield crop whose losses from pests are smaller than those of the improved strain.19 This, of course, would hardly be the case if other inputs such as silos and sufficient and effective pesticides were available, again " The author and the entomologist V. W. Baker calculated the losses from maize storage pests in β number of Ghanaian villages in 1963/4. These fully vindicated the traditional farmers' viewpoint that under their conditions, it is more economical to plant their habitual hybrid maize rather than the higher yielding strains suggested to them at that time by the government.

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illustrating the fact that agricultural production cannot really be successfully promoted by concentration upon one developmentpromoting factor alone. Other important points to remember in this connection are, firstly, that more often than not improved planting stocks have to be produced and handled with great care and under scientific supervision. Usually such conditions do not exist in circumstances of economic backwardness. Secondly, distribution poses a difficult problem where there is no developed transport and communication system, and where no trained manpower is available to distribute plants or seeds in the required time and in good condition. Thirdly, farmers may find it difficult to build up their own stock of seed because improved strains frequently require a selection procedure which, in underdeveloped countries, is beyond most farmers' educational capacity. Finally, destruction by seedborne disease is more common with such selective varieties than with the traditional strains. In other words, the utilisation of improved seed frequently depends on educational progress, which itself depends upon rising living standards and cannot take place without them; these ίή turn hinge upon a variety of developments, including perhaps seed improvement. Given all these reservations, there are a number of cases in which improved seed can play an important role in increasing land production. A number of new varieties have proven themselves very successfully and have been readily adopted by farmers.20 Yet it may be significant that this has almost always happened where market demand for the crop has been fairly developed in advance of production, and not in predominantly subsistence cultures. Good markets exist for rice in many parts of the world; improvements in rice plants, which do not require particularly careful attention in the distribution and planting stages and can be reasonably well-marketed, have therefore gained popularity in spite of all the difficulties mentioned earlier.21 The same is true of a number of tree crops 20 The new strains of rice are perhaps the most successful example, though not the only one. 21 Again the problem is more complicated and specific than outlined here. For example, long grain rice has a far lower per acre yield in West Africa than short grain rice, but the farmer growing the long grain rice is greatly compensated for lower yield and greater labour effort by the market price differential. Thus, while from the national point of view (freedom from hunger) the one sort may be preferable, from the farmer's point of view (profitability) the other type may be better.

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such aB cocoa: the market demand and some market organisation developing almost simultaneously with, if not before, the spreading of cultivation. The cocoa market is almost entirely foreign and is therefore independent of local demand. It has sometimes been observed that government farming has encouraged private farmers in the neighbourhood to follow the state's example. Sometimes private plantation owners have used better seed varieties for export crops and so stimulated small farmers to do the same. However, it also seems fairly clear that such improvements have been usually more successful with export crops than with subsistence crops. The attractions of a cash demand can therefore best provide incentives, and new rather than traditional crops are most likely to encourage farmers to take risks. This may be due to the fact that new crops entail no need to break with tradition. In short, the successful application of new seed usually requires a certain level of education, processing, bagging, storage, transport, administration, as well as land analysis; much extension work is needed in supervision and experimentation, and perhaps also a ready market for the product. The last but not least important problem connected with physical inputs to be discussed here is that of pest control. Whereas water, fertilisers and improved seed are concerned with the positive problem of raising per acre output of the land, pest control is related to the preservation of what has been produced. Plant diseases, insects, rodents and weeds destroy more farm produce in underdeveloped countries than can be imagined by people living in developed nations, unconcerned with agriculture. For example, rats annually destroy about a quarter of a million tons of food in India; tsetse flies prevent the better development of cattle production in parts of Africa south of the Sahara; weeds choke food plants over enormous areas of land and prevent the productive use of even more land in many regions of South America; a quarter of the corn or maize yield in West Africa is annually lost to weevils and other storage pests. The list can be extended much further. In theory, pesticides can be fairly easily handled and used to drastically reduce such losses. In practice, the problem is again far more complicated. In the first place, some pesticides are poisonous, dangerous to handle, and cannot be applied to certain crops without danger to human beings unless supervised by experts. In

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West Africa, maize is usually produced by small farmers. It is dried in the sun and stored in bags, not silos. Insecticides have therefore to be applied in small quantities in the sacks in which the maize is kept for the duration of the season. The necessary pesticide is commercially produced and sold to the farmers together with sealable polythene bags at a reasonable price. So far so good. Unfortunately, the material is frequently not available when it is required. This may be because the government does not always recognise the urgency of the need, or cannot find the time and money to make the necessary arrangements with suppliers, or because distribution is too difficult as a result of poor organisation and widespread administrative corruption; farmers may have to wait long hours in front of the "responsible" official's office and pay bribes too high to make the advantage from the pesticide really worthwhile. Moreover, as they have not been told how pesticides actually protect the crop, they may not properly seal the polythene bags, thus nullifying the whole exercise. Finally, the additional costs involved in the use of pesticides, such as acquiring spraying equipment, may be beyond the farmers' reach even if they have the cash to pay for the insecticides and are willing to part with it.22 Again, the destruction of pests has made best progress where the economy as a whole has already reached a certain level of development. In Ghana pesticides were in wide use when the cocoa trees were attacked by capsid and swollen shoot.23 In this particular case, the government played an important role in promoting the use of pesticides. As the cash crop had to be handled through export harbours, taxes could be levied and part of the proceeds used for the purchase of pesticides. These were distributed to farmers experienced in commercial agriculture who were ready to make good use of them. On the whole, both the incentives to use pesticides and the dangers involved in doing so are difficult to assess on a global basis. 22

This is again a very difficult cultural problem, but known to Europe — the great reluctance of farmers to part with cash, i.e. the great liquidity preference — le baa de laine du paysan. 23 In I960 281,000 gallons of insecticides were used by Ghanaian cocoa farmers, in 1961 220,000 gallons. The figures then fell for a variety of reasons, one being a decline in farmers' profit incentives and another the deterioration of the cocoa administration. An interesting point is that the Amazon type of cocoa became more widespread at that time.

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Sometimes the population is willing and educationally ready to use modern pesticides and sometimes it is not. For example, many farmers in West Africa believe in certain ways of storing crops in the conviction that they reduce losses from pests; they see no reason to resort to commercial pesticides, even when it can be shown that their methods are wholly ineffective. Sometimes the small cost of pesticides is considered too high in relation to the saving that can be expected. This is rarely so where a market economy is already established and where price fluctuation from season to season, i.e. from plenty to dearth, is not only known but actually taken into consideration. In these cases the problem is usually the lack of an organised supply of pesticides. Altogether, it is very difficult to really assess the effectiveness of pesticide utilisation in underdeveloped countries. According to U.N. information, work has begun on expressing pesticide consumption in terms of active ingredient content. The result of the Study is so far approximate and incomplete. From trade data it appears that in 1962—64 underdeveloped countries imported approximately 150 million dollars-worth of pesticides from the developed nations. It may be assumed that the Argentine, Brazil, Chile, Taiwan, Columbia, India, Mexico, the U.A.R. and Venezuela, all of which produce some insecticides, may have added another 60 million dollars-worth during the same period.24 On the negative side, a word of warning may be necessary regarding the use of pesticides; it has been too often overlooked that the ecological balanoe in nature may sometimes be destroyed by the indiscriminate use of pesticides, or by their use apart from a wider programme of farm protection. This has sometimes led to disastrous results in underdeveloped countries, where the use of a single kind of pesticide to protect one crop or one group of crops has been achieved at the cost of a high rate of destruction to others. The use of pesticides is thus subject to the same rules which have been observed in connection with water economy, fertilisers and improved seeds. Phye-

24

Details vide F. A. O. op. cit. p. 47. See also Figures II-7 and 8 for changes in the price of ammonium sulphates, superphosphates and muriate of potaah during the 1950s, and for trends in prices of selected farm inputs in the U.S., which show the differences between the rise in price of farmland ( + 1 2 0 ) farm wages ( + 8 0 ) farm machinery ( + 6 0 ) and fertiliser ( + 5 ) in the first half of the 1960s.

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ical inputs cannot be taken out of context with the environment, and none can bring about considerable advantages unless it is accompanied by broader progress in other adjacent fields of the economy, and perhaps in the social and cultural structure of society as a whole. Per acre production has increased in most underdeveloped countries during the last two decades. Unfortunately, most of this increase has been eaten up by the equally rapid accretion of population. In countries such as Libya, Guatemala, Mexico, Venezuela, Thailand, Taiwan, Syria, Brazil and Honduras, agricultural production taken on an average has annually increased by more than 4%; their populations increased by no less than 3% annually, though always less than food production. In Malaya, Cyprus, Panama, Ethiopia, U.A.R., Iran, Turkey, the Philippines, Ceylon and Peru, agricultural production has increased annually by upward of 3% (but less than 4%), and population by between 2 and 3%. In Burma, Tunisia, Columbia, Pakistan, India, Morocco and Chile, agricultural production has risen by only 2 to 3% annually; population accretion varied very considerably from country to country, from 3.2% in Columbia to a 1.9% annual increase in Burma. In Iraq, Argentine, Indonesia and Cuba, the annual average increase in agricultural production has ranged from 0.7 to 1.7% but population growth has exceeded this by a significant margin. In Uruguay and Algeria, agricultural production actually declined, whereas population continued to increase by more than 1.5% annually.25 Globally, agricultural output has increased since the early 1950s in the following percentages: Western Europe 33, Eastern Europe and the Soviet Union 64, North America 17, Australia and New Zealand 47%. Relating this to population growth in the same parts of the world, i.e. in per capita terms, increases in agricultural production were approximately as follows: Western Europe 20, Eastern Europe and the Soviet Union 39, North America (decrease) —3, Australia and New Zealand 13%. Apart from North America, only Latin America experienced a decline in per capita agricultural production, also by —3%. In the Far East agricultural production increased 26 Data from F.A.O. op. cit. p. 17 Table II-3, "Average Annual Change in Agricultural Production, Food Production, and Population 1962—66 t o 1963—65".

5 V—93

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by 6%, in the Near East by 9%, and in Africa by 1%. If food production is considered by itself, then Latin America and Africa both experienced a decline, —3% in per capita production as compared t o the first half of the 1950s. Again, it seems fairly obvious t h a t even today, if measured in absolute figures, most progress takes place in densely populated areas, whereas least progress takes place in Africa and Latin America where land is still abundant in relation to population. From a historical viewpoint, it may be interesting to note t h a t the great improvements in per acre output of land coincided in Europe with the development of trade and industry. For example, in the 18th century, farming in the Netherlands passed through a period of revolutionary change. The Dutch ceased to concentrate on staple food crop production and began to produce more materials for use in manufacture, such as flax for linen, hemp for ropes, etc. Before long, demand for such crops made them more lucrative t h a n food crops; their prices rose so much t h a t farmers increasingly devoted more land to industrial crops at the expense of their subsistence farms. The income from industrial crops made it possible for them to buy more foodstuffs than they could produce. Moreover, this trend was accompanied by another no less important, namely, a change in consumption patterns, creating a much greater demand for vegetables and fruit. Land in the vicinity of towns was increasingly used for vegetables, and in more remote areas for industrial crops and fruit. As all of these usually required much greater inputs of labour and capital t h a n subsistence production, the effect of the change was revolutionary. Soil had t o be dug more deeply and manured for the new crops; livestock had to be kept for manure and for conveying compost and ash from the towns. New tools had to be used; their use required growing in pure stands instead of intercropping, and ploughing in straight rows wherever possible. In addition, the new crops usually required careful weeding, again raising the demand for labour. The new crops produced incentives for the search for new tools, better methods of land exploitation and greater labour requirements; where land was not abundant, all this led to concentrating production on the most expensive and labour-intensive crops. Above all, however, it was t h e requirements for processing the industrial crops — labour for oil presses, for drying ovens, for raking, hackling and flag-spinning, to name

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only a few — which absorbed the ever-increasing labour force in Europe. 26 Thus, while agriculture adapted itself to the requirements of a money economy, it also provided more employment for the growing population and a higher produce per acre of land. English historians usually refer to this change as the introduction of the "New Agriculture". 27 This may be so, but as the term "New Agriculture" is so vaguely defined it may be useful to trace its meaning a little more carefully, in the hope of finding a clue to a better understanding of the general process of agricultural development. Firstly, it meant the transition from cereal production to a variety of crops and the introduction of crop rotation. Secondly, the decline of fallow land and consequently more manuring. Thirdly, the devotion of increasingly more land to cash and industrial crops and often the consolidation of holdings, enclosures, and improved livestock production. All these symptoms had here and there become evident long before the advent of the "New Agriculture". Therefore it may be true to say t h a t the change was quantitative rather t h a n qualitative. I t was the frequency with which new farming methods were adopted t h a t made them obvious to the observer and justified their being called revolutionary. The impression gained from reading histories of agricultural progress in Western Europe may be summarised as follows. Population growth accompanied by the rise of cities brought new agricultural problems and solutions. Starting perhaps in the 17th century in the Netherlands, where trade with the continent of Europe along the Rhine was combined with the northern trade on the high seas, a profound change took place. One important aspect of this change was that farmers' decisions regarding what and how much they would grow became increasingly less influenced by their immediate household requirements and more by the price relationships of their various crops on the urban markets. Once this change had taken place, the whole structure of Dutch 26 Vide: Y. S. Brenner, A Short History of Economic Progress, Chapters I and II, especially pp. 119—24; Β. H. Slicher van Bath, The Agrarian History of Western Europe A. D. 500—1850 (English translation, London 1963); Lord Ernie, English Farming Past and Present (Ed. G. E. Fussell, London 1961). 27 For a definition of "New Agriculture" see Y. S. Brenner, op. cit. pp. 11— 17, and E. L. Jones, Agriculture and Economic Growth in England 1650— 1815 (London 1967).

5*

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agriculture was transformed. Cereals began to be imported from countries which were less densely populated and naturally more suitable for cereal production, while Dutch farmers increasingly specialised in the production of more perishable crops such as vegetables and other foodstuffs; these, incidentally, also required more intensive land use and could not easily be stored or transported over great distances. The spreading of industrial crops, such as flax, was of course closely related to the growth of industry. Thus the rising density of population did not result in long-term food and unemployment crises, but in the intensification of land use. Prom the Netherlands the trend apparently spread to England where conditions were not dissimilar. English concentration and intensification of production also affected production in America. England became the market for American cereals and grew increasingly more intensive in her land use, re-introducing laboursaving equipment.28 Agricultural progress came later for the rest of Europe where social, legal and political conditions were less amenable to change and prevented the early growth of modern agriculture and industry. However, when some of these socio-cultural restrictive influences broke down, development and adaptation were very rapid.29 In the 18th and early 19th centuries, farmers in France and Southern Germany were mostly poorer than their English counterparts; their land-holdings were usually also much smaller and less suitable for introducing some of the best improvement schemes already accepted in England. In France particularly, numerous seigneurial privileges diminished farmers' incomes to a level which made it practically impossible for them to invest in improvements; at the same time, large landowners were seldom interested in expensive land improvement schemes because their incomes were fixed and, much less than in England, were not dependent on better exploitation of the land. In short, the industrialisation of agriculture in Europe, or the raising of per acre and perhaps per capita yields of the land, was attended by firstly, a tendency towards more market production and regional specialisation, and towards more concentration of effort upon crops which were expected u For a brief but useful discussion of English agriculture in the 19th century, see E. L. Jones, The Development of English Agriculture 1815—1873 (Studies in Economic History, London 1968). 88 For more details, see The Cambridge Economic History of Europe, Vol. VI, Parts I and Π (Cambridge, 1965).

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t o yield the highest cash profits; secondly, by extension of the cultivated area through deforestation, drainage, irrigation, etc.; thirdly, by the development of transport 3 0 and of an industrial technology capable not only of producing equipment able to replace men, but also of improving the work itself; 31 fourthly, by the application of chemistry and other new knowledge in t h e natural sciences, as a result of which very considerable increases in quantities produced per acre of land were achieved. Hence, economic development may well require per capita output and the per acre yield of farmland to be raised simultaneously, as both are closely interrelated and conditioned by the growth of effective demand. However, the yield is dependent on the development of manufacturing and industry t o supply farmers with exchangeable goods, i.e. with incentives and improved equipment and inputs for agriculture. Furthermore, it is fairly certain t h a t the requirements of a growing manufacturing industry will put additional strain on agricultural production through its demand for agricultural materials; this will again influence farmers and encourage them to improve land utilisation and to exploit hitherto under-utilised land. Finally, the coming of an exchange economy will give rise to many secondary occupations and services which not only provide a great deal of employment, but also promote the kind of administrative relationship which makes marketing and distribution problems in the rural sector less thorny t h a n is usually the case in pre-industrial societies. If all these processes can be stimulated by outside capital assistance taking care of developmental projects which are beyond the immediate recognition and interest of the individual farmer, such as large-scale electricity or water supply, the development process will not be adversely affected by a high rate of population accretion. I n time, higher living standards will take care of the population problem. Once living standards rise above a certain level, the 30

Vide A. M. Milne and I. C. Laight, The Economics of Inland Transport (London 1963); and Christopher I. Savage, An Economic History of Transport (London 1959). " Vide Τ. K. D e n y and Trevor Williams, A Short History of Technology from Earliest Times to A. D. 1900 (Oxford 1960); and Charles Singer, E. J. Holmyard, A. R. Hell and Trevor Williams, A History of Technology (Oxford 1958).

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rate of population growth will abate as it has done in Europe. The issue is how to raise living standards; the answer is by increasing the per acre yield of available land and increasing the per capita output of labour. As we have seen, both may be technically possible. We shall now examine the possibilities of turning technical potentiality into economic reality. This requires capital and incentive, both of which are connected in a variety of ways.

III FORMS OF ORGANISATION I N AGRICULTURE AND T H E FINANCE OF AGRICULTURAL DEVELOPMENT

There are several ways in which a community can be organised to improve its standards of living. Sometimes such organisation may come from above or from outside; other times it may come from below in the form of indigenous growth. A government may impose an administration upon a community with the deliberate objective of making more effective the efforts of individual members. For example, it may set up purchasing stations or marketing boards, or introduce a system of taxation for financing the promotion of welfare where individuals are unable to do so or do not recognise the necessity. Indigenous organisation may arise from family or tribal ties and the everyday needs of a community. I n the Free Enterprise or Capitalist societies, most agricultural organisations grew out of the second type of cooperation. 1 I n the Socialist countries the first, outside-imposed, type of organisation is predominant. 2 Whether one type or the other is more advantageous for a community depends upon the specific conditions in which the community finds itself once the necessity for modern organisation arises. I n examining economic growth in free enterprise societies, we find that at least two forces served as the motive power behind their progressive development. These were firstly, the stiff competition between capitalists which forced individual entrepreneurs, or groups of entrepreneurs, to be continuously on the alert for new and better techniques of production which would enable them t o undersell their competitors and survive in this world in which homo homini Iwpus est. The entrepreneur who cannot organise his enterprise as efficiently as, or more efficiently than, his neighbour, 1 Vide Y . S. B r e n n e r , A Short History a n d V. 2 Vide Ibid., C h a p t e r V I I .

of Economic

Progress,

Chapters I I I

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or who is either unable or unwilling to introduce new work-improving and labour-saving equipment whenever his competitors do so, is bound to be driven out of business. Hence, competition usually has a positive effect on economic growth because it causes an incessant search for organisational and technological improvements. Secondly, in free enterprise economies, all entrepreneurs are faced with another kind of strain or competition which further accelerates this need for better manufacturing equipment; namely, the struggle between capitalists and organised labour for the greater share in the fruits of production.3 Marx and Engels wrote that slavery began when and where the productivity of labour had risen high enough to produce more than was necessary for the satisfaction of immediate needs for the labourer's survival. In their view, there was little point in owning a slave who ate all he could produce. Only when he was able to produce a surplus above what he required for survival was something left for the slave-owner to take away. Only then could the effort and investment in capturing and buying slaves become economically reasonable. In early modern industry workers laboured long hours. Part of their labour time was devoted to production of the goods required for their sustenance, i.e their wages. Only after this "necessary" time of work, could the entrepreneur hope to gain advantage from their labour. However, as the time during which the employer can employ his labour force is restricted by such factors as length of daylight, tradition, etc., he can only increase his share of the product, i.e. his profit, by either improving the organisation of his production processes so that less time is wasted, or by supplying his labour force with equipment which will raise productive effectiveness. Both processes require an increasing degree of concentration of labour. But concentration of labour supplies workers with an effective means for defending their own interests as distinct from those of their employer. As much as they are dependent upon the employer to provide them with work and income, is the employer de3 Fascism is of course one method by which capitalists tried to esoape from this pressure; some "socialist" governments may achieve it by destroying the trade unions under the guise of finding no more need for them as the government is already protecting the workers' interests. See Frank Cousin's speech to the T. U. C. in 1968: " W e are rapidly reaching the stage where we have to ask ourselves whether we can . . . prevent the Labour Government from destroying the Labour Movement."

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pendent on them or their labour for his profits and success over his fellow entrepreneurs. Thus, the interdependence of employers and employees and the physical concentration of the latter in free enterprise economies sometimes gives them the opportunity to raise their wages and shorten their working hours. I n theory, equipment which can reduce by half the necessary labour time for producing a given quantity of goods might enrich an entrepreneur very considerably. In practice, such technological improvements will frequently be followed or accompanied by workers' demands for higher wages. A tug-of-war develops between employers and employees to decide who will receive the greater share of t h e increased value produced by the improved equipment. The form in which this struggle becomes manifest varies from case to case. When competition between entrepreneurs for markets is very stiff, it takes the form of falling prices. The workers then have the advantage of being able to buy more goods for their wages without actually having the latter raised. At other times, the struggle takes the form of wage increases without reduction of prices. The results inasfar as wage earners are concerned are similar — their living standards rise. One way by which the employer can compensate the loss of profits due to wage increases is by again improving the organisation and machinery. 4 This, then, is in broad lines the process by which 1

An imaginary example to illustrate the point. Onee upon a time a spaghetti manufacturer lived in a small town in southern Italy. H e had 100 nice girls working for him, making spaghetti and singing happily at their work. H e paid each girl £1 a day, spent £25 on raw materials each day, and sold his spaghetti on the market for £150 each day. Having thus paid out £100 in wages and £26 in materials, he earned £25 for his effort and enterprise. He moved to New York to join his brothers. Again, he produced spaghetti which he sold for £150 each day. But now he had only one girl working for him, and paid her £20 a day; he had machines for which he had to allow depreciation and interest on the loan he took from the bank to buy them, etc.; in all £40 a day. The girl was 20 times better off than she was in Italy where she earned only £1, and he was twice as well off as in Italy because instead of £25 he now got £90 for his effort and enterprise though, of course, he had to spend another £15 each day on nightclubs and gramophone records to make up for the absence of the 99 girls who used to sing all day in his old factory. Even if American spaghetti prices fall to only £100 per day's output, he will still be as well off as in Italy, because he will earn £40 less £15 for nightclubs and gramophone, leaving him with £25 net, but his spaghetti will also be cheaper by one-third.

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free enterprise economies in Europe and America have almost automatically raised the people's per capita incomes.5 How does all this relate to agriculture? If there is no outside supply of foodstuffs® and a growing industry is dependent on local agricultural production, farm produce prices will usually rise, and with them the farmers' incomes and incentives to produce. However, if the growth of industry is accompanied by an inflow of free or cheap food from elsewhere, industrial progress may have little effect on farming and farmers. This applies equally to the production of industrial raw materials of agricultural origin. Yet while industrial workers find it relatively easy to organise in defence of their immediate interests owing to their physical proximity, farmers, by the very nature of their occupation, are dispersed over vast areas and cannot so easily organise. Moreover, industrial workers are usually faced with the harsh alternative of either finding employment or suffering starvation, as they have little means of supplying their own food. This makes their position extremely precarious, and fear of unemployment strengthens their propensity to organise. In contrast, farmers can usually fall back on subsistence production for their livelihood. Their need for organisation arises more from the positive wish to improve than from the negative need to protect their existence. Farming is not only an occupation but also a way of life, and this further complicates the problem. Industrial workers meet for a number of hours each day, during which time they are occupied with certain operations prescribed to them by the employers; they then return home and engage in social activities which are not necessarily linked to those of their fellows. The likelihood of friction is smaller than in closely-knit village communities where people carry their social obligations continuously. Farmers have closer family relationships, more traditional social likes and dislikes and divisions than do the industrial 5

It was because of this mechanism that classical Marxism always assumed that the historical task allocated to the capitalist era was t o create the means of production which enable man's progress to greater material affluence; the historical task of socialism was to convert the potential into reality through socialisation of the capitalistically-produced means of production and the equitable distribution of the wealth they can create. 6 "Food Aid" for example. Vide F. Α. 0 . , op. cit. pp. 45—46, for the increasing efforts to link food aid with agricultural development measures in receiving countries.

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workers who, owing to the separation between work and social life, may escape more easily. In addition, farmers are frequently divided into different groups as a result of land ownership or tenure, while income differentials even within small communities often reduce their ability to cooperate in furtherance of common interests. A farmer with much land may well have economic interests which substantially differ from those of the smallholders. The history of the enclosure in England is full of such examples and of controversies about the stocking and over-stocking of common land with cattle. 7 I n some cases, large farmers claimed t h a t the right to stock cattle on common land should be related to the size of land holdings elsewhere, while small farmers claimed t h a t every man had personal rights to common land, a kind of "one man one vote" system. The common was frequently overstocked by t h e rich, a fact which did not help efforts towards cooperative action. Such examples are many and varied and can be found in any village community even today. Industrial workers have less antagonistic differences of this kind. I n short, then, a number of objective causes make it difficult for farmers to cooperate, while under suitable circumstances some factors make it easier. Sometimes family and tribal ties may be subversive to cooperative efforts, but at other times they may be very effective sources of cooperation. Sometimes traditions may be harmful, at other times of great value for the promotion of rural cooperation. On the one hand, a strongly knit tribal affiliation may be politically dangerous in a newly-created national state; on the other, the same tribal connection may serve as an effective instrument of progressive organisation. Perhaps many governments of underdeveloped countries make the mistake of fearing national disintegration through tribal traditions; they deliberately do all in their power to destroy tribal organisational frameworks, substituting administrative organs for them instead of adapting them to new roles. While tribal frameworks enjoy the confidence of the rural population, the imposed administrative set-ups are usually alien and do not harmonise with the people's traditions. Consequently, they are also ineffective. 8 ' Vide R. H . Tawney, Agrarian Problems in the Sixteenth Century (London 1924). • A n excellent example of the harm which can be done by imposing an outside administration in place of a traditional one is found in Dr. Nkrumah's

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If we consider the progress of society in the economically advanced countries in its historical context, we find t h a t several hundred years ago these societies were socially organised along what may be called vertical affiliations. A poor peasant found protection in his familial or tribal associations within a feudal hierarchy; this made him a member of a collective which stretched from the head of the pyramid, the lord, down to its base, the poorest farmers. The lord of the mannor, although the main beneficiary of the structure, had a common interest with those socially and economically beneath him. This common interest united them against all others. The farmer relied on the aristocrat's protection and assistance, and the aristocrat relied on the farmer's surplus product as his source of income. The aristocrat represented all those tied to him by the feudal or semi-feudal hierarchy, and his interests were seldom totally different or opposed to those of the people beneath him. 9 Modern society in the developed countries has created a new kind of alignment which may be called horizontal as distinct from the vertical feudal nexus. 10 People are linked by their similar income groups or by the nature of their employment. This is a class society and not a hierarchical society in the feudal sense of the term. The rich men, the employers and money magnates, do not feel t h e needs and do not represent the interests of other classes because their own interests are antagonistic to all others. The upper layer of the pyramid is interested in securing as much as possible of t h e product of the labour of other classes. I n spite of the competition among themselves, this makes them unite against all those below ill-fated efforts to replace the functionaries of the old Ghana Cocoa Marketing Board by his new administration. Vide Omaboe, Neustadt and Birmingham, A Survey of Contemporary Ghana (London, 1966). * For a summary of feudal relationships, see "Feudalism" by Marc Bloch and others in Encyclopeadia of the Social Sciences. 10 Industrial Pre- Industrial (Class) society. (feudal) society. Lord

Rich

Vassal

Middleclass

Villeins

Poor

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them. At the same time, the lower layers of their society are equally interested in retaining as large a share as possible of the fruits of their production, and they too act in unison against their employers. As most leaders of underdeveloped countries have at one time or another been exposed to societal structures in developed countries, they have accepted this kind of structure as a necessary aspect of development. Moreover, their individual needs as members of the upper Echelon of society also run contrary to the traditional requirements of vertical social arrangements. For example, the extended family which provides their society with necessary safeguards for the survival of the individual, becomes a stumbling block on their way to acquire individual wealth. The extended family, which is the indigenous organisational framework of rural society, is therefore treated by the leaders of most underdeveloped countries as a negative element. They believe that destruction of these arrangements is a prerequisite for economic progress, and never even examine the possibility that this may not be so. In Europe, the breaking of family ties precipitated the industrial revolution. This was so because only when the individual had no family to protect him were industrialists able to enforce the kind of labour discipline, the scourge of unemployment and hunger, which suited the requirements of rapid industrial growth in early 19th century England and late 19th century Europe. But this important and very unpleasant factor in the development of some countries nearly a century ago may not be a progressive factor in breaking away from the vicious circle of poverty in present-day underdeveloped countries. Potential traditional sources of organisation in underdeveloped countries must therefore be re-examined to see whether some of them cannot be usefully exploited for progress. Confidence is naturally the most important element in cooperation. Where it is lacking, it may sometimes be substituted by institutional arrangements with inbuilt factors of security. In the early development of cooperative agriculture in northern Europe, it was usually the village community which provided the first source of cooperate organisation. The people in the village knew each other and were therefore best able to assess the trustworthiness of each other. Consequently, they were able to elect those in whom all had sufficient confidence to entrust them with their business. Frequently, the selected were heads of families; they knew

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each other from their daily life and were able to weigh the value of words and the weight of real effort which would stand behind each of their undertakings. I n addition, their common property or combined lands sometimes served as security for loans. Such cooperative borrowing was less costly than individual negotiation of loans with the moneylender. Here again, the smallness of the village community enabled each member to know enough about his neighbours to be able t o judge t h e soundness of their common bond. Moreover, members were able to exert considerable social pressure on a defaulter to comply with requirements of the common good. The farmer who did not fulfil his obligations to the community met such pressure, whereas if he was really unable to do so the reasons were known to his fellows who then came to his assistance. The cooperation between heads of families or elected representatives and their common responsibility based upon the security of their land, not only enabled them t o borrow money at more reasonable rates of interest, but also stimulated other forms of cooperation in spheres which went beyond the interests and possibilities of individual farmers. The construction of roads, storage buildings, a water supply system etc., changed from being a mere dream or hope into a subject of constructive discussion for all. The construction of a water reservoir, for example, would be far beyond the financial and physical possibilities of an individual farmer, but often not beyond those of the combined families; each farmer was allocated the share he had to contribute and the share of the advantages he was to gain, even before construction began. A farmer with little land, requiring only a small share of the water, would contribute less to the construction t h a n the rich farmer who stood to gain most. Even today, such cooperation is found in many places where even relatively rich farmers may not be able to acquire a tractor or a vehicle; the combined villagers will not only be able to afford t h e one or the other but will also find sufficient work for its full utilisation. 11 This method of cooperative effort is often superior t o government aid. Firstly, as the equipment is the property of all members of the village, they all feel responsible for its maintenance and proper utilisation. Social pressure brought to bear on individual 11 This example is frequently observed in Moshavim Israel today.

(cooperatives) in

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farmers for damaging or neglecting the equipment will usually be so much heavier than government supervision can exert, that the cost of repairs and replacements will be considerably lower. Secondly, the driver of the tractor or vehicle is not merely an employee of a state organisation accountable to an official who may or may not care about it, but a member selected by the community and its elders for his particular qualities. The person who ultimately uses the equipment will be considered by the community the most suitable person to do so, while he will know that he is accountable to people who hold considerable social sanctions over him. This point cannot be overstressed, one of the most difficult problems in underdeveloped societies being to stimulate a feeling of individual responsibility towards a job and equipment. In European society, the centuries of fear of unemployment and starvation 12 and of guild and trade discipline, helped to impose strict standards of responsibility and workmanship. Members of a trade could not set up in business until they had given proof of responsibility and professional ability. Indeed, the requirement that a man make a "masterpiece" before he could enter a guild left a deep impression on his mentality, making him proud of the job he was doing. In most rural communities of underdeveloped countries, this state of mind or tradition does not exist. Where it does, it is not in fields of employment in which it is most necessary to achieve greater economic efficiency. Partly this is due to the fact that extended family relationships obviate the fear of starvation which influenced European workers; partly it is also due to the fact that little social status is inherent in the accomplishment of manual jobs. This does not mean that craftsmen are not proud of their handiwork; what it does mean is that such pride does not usually suffice to make the tractor driver feel that particular sense of responsibility towards his equipment which, until recently, was common amongst Europeans. This gap may perhaps be overcome by social pressure, evidencing one more reason for stimulating village cooperation in preference to direct state aid. It might be reasonable for governments to encourage banks to lend money to village communities on the security of land owned 12

This will be discussed in more detail in the chapter on the social im-

pediments to development. Here it is sufficient to remember the writings of Charles Dickens and Emile Zola.

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by the village collectively, rather t h a n to individual borrowers. Or a government might help out on the marketing side by setting up a kind of agra-produce stock exchange at demand centres. This would stimulate farmers to grade their products and t o mark their sacks, baskets or boxes with individual signs; literate truck drivers able to record the number of containers contributed by each farmer, would take the total product to market for sale by auction or any other way permitting official registration of prices. At given intervals, the village elders would then be able to distribute the profits in accordance with the official receipts, giving each farmer his own share and retaining part of t h e total income for communal investments. Village communities usually have their traditional basic forms of organisation which need only be adapted to t h e new requirements, making it easier to achieve the necessary degree of cooperation for development than through new organisational methods. Once a village community or its elders begins t o realise the possibilities and advantages of cooperative action, there is nothing t o stop them improving their whole structure of production and creating their own type of administrative link with the outside world. Indeed, they may even build up a political administration from below which would enjoy their confidence and be part of their society and as such be protected from corruptive outside influences of imposed administrations. The purchaser and marketer selected by the community of which he is a member will usually be better able to bring fertilisers, instruments, seed etc., at the right time and at the best cost to the village, t h a n a less interested outsider. The marketer who is a member of the village, and whose prestige and peace of mind at home depends upon doing better t h a n others, will also be more efficient in selling the village products t h a n a routine-bound administrative official. Historically, the process of agricultural cooperation in economically advanced countries came in a variety of forms. I n England, the progress of agricultural efficiency owes a debt to the greater landowners who invested in land their profits made in trade and manufacture, and who from a fairly early date exploited their land in an industrial fashion. They used landless labourers as wage workers and treated them similarly to industrial workers in the towns. I n due course, many farmers were deprived of their land; efficient utilisation of agricultural labour was then no longer as difficult as

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when farmers owned their own land. If the wage-earning farmer did not work efficiently and care for the equipment, he was sacked and subjected to all t h e unpleasant results of unemployment. This is hardly possible in societies where the land continues t o be owned by those who farm it, and where social tradition makes it impossible to subject the inefficient members of the farmer's family to the penalties which capitalist agriculture could impose on them. I n Denmark and parts of Germany and France where farmers held small areas of land, exploiting it with the labour of their own families, real progress came only with cooperation. Unlike their English counterparts, landlords in France and Belgium had little interest in agricultural improvements because, until the end of the 18th century, the political structure did not encourage them t o take much interest in their farms. As is the case in underdeveloped countries today, it was then easier to make a fortune in office t h a n through "undignified" labour on a farm. I t was far more respectable and advantageous to t r y to gain influence in Versailles or Paris t h a n to devote one's efforts to rural production. The poorer farmers wore unable to make much progress because their farms were seldom sufficiently large for them to really gain from improvements. Moreover, so little of their produce was left to them after various juridical difficulties had been settled and the high taxes and traditional payments made, t h a t reinvestment was almost impossible. Only after feudal payments were abolished by the National Convention of 1793 could small peasant landowners keep sufficient of their surplus t o be able to invest in better agriculture. Together with the distribution of confiscated churchlands which helped to increase the size of some smallholdings, this in effect marked t h e beginning of a change towards higher profitability in agricultural production. 13 Without the growth of towns and development of transport during the 18th and 19th centuries, these advantages might never have resulted in greater affluence for the farmers. During the second half of the 19th century, in particular, when the growth of towns converted French farming from cereal production to market gardening, the French peasantry began to find its way towards higher living standards and productivity. I t was also during this period 13

For a more detailed discussion, see Y. S. Brenner, A Short History of Economic Progress, pp. 96—124.

6 V—93

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that cooperation began to play an important role in France. Indigenous sources of cooperation included syndicates for sharing the cost of drainage and irrigation works, and societies for fighting the phylloxera pest and for maintaining prices. In the 1880s the Societe des Agriculteurs de France and the Cornices came into existence. In 1848, trade unions were legalised in France, giving farm workers the first opportunity to organise effectively. Before long these organisations became forums for discussion and the exchange of ideas, and sometimes even for political activity. More often they organised the collective purchasing of manure and seed, and the setting-up of branch societies for cooperative banking, insurance against loss of cattle by disease, hail and other natural adversities. Some even set up retail stores for distributing manure, seed, cattlecake, insecticides, and less frequently also consumer goods such as clothes and soap. Eventually, some unions bought agricultural machinery, hiring it out to members against payments which helped to repay the initial investment. Thus, the cooperatives not only saved people time in transporting and marketing their goods, but made expensive agricultural machinery available to everyone at a price which even small farmers could pay. In other words, the cooperatives in France helped to fill the capital gap which had been filled in England by the rich landowners. They gradually underwent change and reorganisation, so that by the end of the 19th century they were increasingly concerned with selling produce rather than with purchasing equipment and arranging loans and insurance, for which other solutions had been found. By the beginning of the present century, in fact, the organisation of cooperatives was more frequently related to the product than to geographical proximity. The position of the farmers in 18th century Germany west of the River Elbe was similar to that in France. Almost all land in this part of Germany was held in hereditary or life tenancy, giving farmers security of tenure. But again, holdings were too small to allow efficient exploitation. A very important stimulus to organisation came from the Raiffeisen Banks which helped farmers to overcome capital shortages at the time when this was most necessary. Friedrich Raiffeisen was the mayor of a number of villages in the western part of Germany, who started a cooperative bakery in 1846—7. As this met with success he began in 1858 to organise a rural mutual assistance society, whose objective was to enable small farmers to borrow money at low interest rates. This was very important be-

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cause hitherto high interest rates had been demanded whenever money was required for seed, fertilisers or seasonal hired labour. As these expenses usually have to be laid out before earnings come in, i.e. before the crop can be sold, the importance of low-interest loans is self-evident. Traditionally, rich landlords or moneylenders advanced money to the farmers on the security of the land, at the highest interest rate possible. German aristocrats, who did not like to be publicly associated with money matters, were frequently represented by Jews who were excluded by law from almost all other occupations. Raiffeisen's idea was to organise small societies with unlimited liability, i.e. in which each member is responsible with all his property for money borrowed, for promoting the mutual financial help of the society's members. These members had to be landowners, so that their land by virtue of the society's unlimited liability would permit them to borrow at low rates of interest. In time the organisations became banks and spread rapidly. Thus, with virtually no capital subscribers and only loans and land as security, they did rather well in financing the economic progress of small landowners. Here, the principles of mutual responsibility mentioned earlier were really put to the test. As the borrower, being a member of the community, received money on the security of Iiis neighbours' land, it could be assumed that he would not be lent the money unless his neighbours approved. This had a positive effect on the efficiency of investments, though on the other hand it also imposed a rather conservative attitude. Eventually, the Raiffeisen banks began also to use normal banking methods, which enabled them to increase their loan capital far beyond the amount of savings actually held. From an organisational point of view, the most important aspect seems to be that many people were contributors and partowners of a bank and that they all decided whether or not a loan was justified. In other words, finance was dependent upon the borrower's personal standing in his community, on personal knowledge of the man, his integrity, responsibility, industry and ability. Undoubtedly, this had a considerable influence on social behaviour and patterns of village life in Germany. On the one hand it helped mutual cooperation; on the other it produced the kind of middleclass respectability which, though socially not very pleasant, is economically rather productive. It stimulated responsibility and the general wish to appear efficient and industrious.

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Perhaps the most interesting country in which to study rural cooperation is Denmark which, until the 19th century, had been a corn-exporting country. The land was good for corn production and the country's geographical location suitable for easy transportation. The growth of industrial towns in England, Belgium and Germany provided the necessary cash markets and Danish landowners, not unlike the English, made money in trade and were mentally attuned to exploiting their land with reasonable efficiency. Danish peasants, however, were legally in a better position than their English counterparts and could not be as easily evicted. In the 1840s when Britain reduced her import duties on corn almost to the point of abolition, corn exports from Denmark increased to an unprecedented peak with Danish smallholders sharing in the resulting profits. During this period, provincial banks and credit associations also developed and helped farmers to improve their methods of production. Other changes began to take place in Danish society. Rural population declined in relation to the growth of urban population. In the first quarter of the 19th century two-thirds of all Danes were directly employed in agriculture, but this dropped to less than 50% at the end of the century. More important was the fact that Danish farmers rapidly adapted to new situations. Improved transport and corn yields in other parts of the world, particularly America and Russia, did not lead to a lengthy depression of Danish agriculture but to a shift away from cereals towards livestock production. Partly this was due to the declining fertility of the soil which had been over-exploited during the years of the corn boom, but also to the revolutionary changes which took place in dairy farming, particularly in the case of butter. Previously, butter production on a commercial scale had been an expensive and difficult problem: expensive because the making of butter required costly equipment; technically difficult because economic production meant that milk had to be collected from a great many farmers. Cooperative efforts were of little use because stored milk or milk which has been badly shaken in transport is singularly unsuitable for buttermaking. In the 1880s, however, a new butter-separator became available which used a different technique and solved most of the earlier problems. This separator could make butter out of milk which had been transported over long distances and stored for a reasonable

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length of time. Numerous cooperative creameries were organised, which enjoyed considerable advantages from economies of scale. Each farmer who joined a butter cooperative contracted t o deliver all the milk produced on his farm except t h a t used by his family. Transport was arranged by the creamery, butter was produced under the direction of a hired, technically-trained creamery manager, and the proceeds from the sales, after deduction of operating costs, were paid t o the farmers in proportion t o the amount of milk delivered. I n addition, the skim milk was returned t o the farmers. Here too, finance came from a loan raised by all the cooperators on t h e unlimited security of their land and property. Once again, t h e local character of the creamery ensured t h a t all the people concerned were well-acquainted with each other. Within the relatively short period of five years, more t h a n 500 cooperative creameries developed in Denmark; the consequent demand for trained creamery managers led to cooperative efforts for better technical education. At the same time new developments took place in the utilisation of by-products. Skim milk was used to feed hogs, and this led in turn to cooperative efforts to establish a bacon industry. T h u s the skim milk, an almost costless by-product of the creameries, became the "new material" for the bacon industry, and hogs' bones and other non-digestible parts became inputs for more intensive agriculture which again helped t o increase the farmer's income. The Danish example is noteworthy for students of agricultural development, demonstrating as it does the close relationship between agricultural specialisation, improved agricultural technology, and the rising industrialisation of agricultural production. I n fact, it demonstrates a closed circle of industrial agriculture: the by-product of butter production is the food for hogs which produce meat for sale and fertiliser for better cow fodder and BO, once again, to milk and its cycle. I t demonstrates how rational agriculture can increase the value of its product and the nourishment available for man and beast, and provide more work for t h e underemployed. The Danish example further demonstrates t h a t agriculture, no less t h a n mineral resources, can be the crucial factor in a country's industrialisation process. Denmark may well be the best example of the advantages of farmers' organisation from below.

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Briefly then, agricultural development in free enterprise countries was successful when it came in one or a combination of the following forms. Firstly, the investment by large landowners of money earned in farming or in manufacturing and trade. This was usually accompanied by the eviction of rural tenants who became agricultural wage labourers, dependent for their livelihood on employment and with no land to fall back on for subsistence production. Secondly, the cooperation of tenants or small landowners who by organising on the basis of their intimate knowledge of each other, managed to overcome capital and labour shortages whenever and wherever effective demand for their produce arose as a result of industrial urbanisation. The former method, divorcing the farmer from landownership, was usually accompanied by land consolidation and hardship for the evicted farmers. The cooperative method depended on the simultaneous development of markets and on the non-hostility to such organisational efforts of traditional relationships within the community. This process was usually slower to mature than the former. Another way by which economically efficient organisation may be promoted in rural communities is by its imposition from "outside". Thus, the Pharoahs of ancient Egypt organised the collection of agricultural surplus through a highly centralised administration. The Romans imposed an equally centralised surplus-collecting administration upon the peoples of the ancient world. Also, the rulers of Japan less than a century ago, and even more recently, the Soviet Government when it discovered that farmers could or would not cooperate. While other governments imposed organisational frameworks designed merely to collect agricultural surplus, that of the Soviet Union also set out to improve agricultural production by raising output and productivity. A variety of other organisational frameworks are imposed and promoted by national governments or international organisations for developmental purposes. Instruments most frequently employed for this purpose include state aid, agra-finance groups, supported prices, marketing boards and even payments for not using available land. Let us begin with the outside promotion of rural organisation as experienced in the Soviet Union, in Palestine and Israel, and in a number of underdeveloped countries, for example Ghana. Until World War I,, the Ukraine was a major source of cereals for industrialising western Europe. Good rail communications and fertile

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14

land made this trade possible and lucrative. In fact, Ukrainian cereals paid for most of Russia's imports. The Russian Revolution changed the situation. The Bolshevik leadership felt that it could not rely on the capitalist world to exchange Russia's agricultural surplus for the industrial equipment necessary for the country's development. Firstly, because coordinated effort by capitalist states could dictate economic policies to the Soviet Union through price and demand manipulations. Secondly, because the requirements of the Soviet planned rate of industrialisation were such that any surplus produced would have to serve the indigenous growth of Russian towns and industry to feed industrial labour and machines. This policy, resulting from the leadership's awareness of the hostility shown by surrounding capitalist countries towards the Soviet Union, was therefore politically and not economically motivated. Industrialisation of necessity requires not only the transfer of many people to the towns where they can no longer produce thenown food, but also the concentration of capital for financing the industrial processes and, above all, the supply of means of production. Agriculture therefore not only had to provide food and industrial raw materials, but also the capital required for industrial growth. This meant that efficiency of agricultural production had to increase sufficiently to make up for labour lost to the towns; it also meant that farmers could not share in the advantages resulting from higher per capita output. 14

Vide Y. S. Brenner, Theories of Economic Development and Growth, p. 226. "The major controversy in the economic sphere, which arose in the early 1920s, was about the financing of the development plan. Economists like Lev Shanin, Bazarov and Groman, the spokesmen of what came to be called the 'Right Opposition', held the view that agriculture should receive priority in all development schemes. Their argument was that agriculture can absorb more labour per unit of capital in an underdeveloped country, because of its low capital-output ratios, and that an agricultural population has a relatively low consumption rate. Therefore, they concluded, if priority were given to this sector net savings would be highest and could then be channelled towards industrial development investment. Factually their argument rested on rather good evidence from past experience. Firstly there was the experience of the prosperous pre-revolutionary Russian corn export trade. Secondly, the rate of profit in agriculture had for many years averaged about fifteen per cent, whereas profits in industry averaged only about six per cent. Shanin's idea was therefore to invest initially in agriculture where growth would yield the highest rate of savings and then transfer the accumulated capital to industry."

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This was paradoxical. Unless farmers get a rising share of the higher per capita yield, they are left with no income to invest in further improvements. If they have no income with which to effect improvements, there is little likelihood that they will be able to increase their per capita production. Initially, Stalin thought to overcome this paradox by taxing farmers so much that they would not only be forced to reduce consumption, but also to increase their efforts to produce. He believed that farmers were "wasting" too much of their product on consumption and working too little — at least less than they could. Faced with the choice of giving farmers positive profit incentives and income to be able to work more efficiently, or of forcing them to work harder and consume less by taking away whatever income they may have had in excess of their immediate needs for survival, Stalin chose the latter alternative. As future events were to show, he over-estimated the real capacity of stringent government measures to produce the results he expected. Instead of increasing their efforts and consuming less, farmers began to hide the economic capacity of their farms and consumed as much as possible of their output to prevent the State from laying hands on it. Indeed, if the advantages and disadvantages of Stalin's farm policies are compared, a great deal may be learned about the importance of profit incentives in agricultural development.15 Basically, the idea was that the money skimmed off the rural sector should be used in industry to produce the technological equipment required for agriculture, such as tractors or similar labour-saving devices; these would eventually help farmers not only to make up for losses through government taxation, but also increase their yield so much that in spite of high taxes they would still be better off. In the long run this might well have been achieved, but in the short run persuasion alone was not enough to overcome the difficulties. It was impossible to convince the farmers of the necessity to tighten their belts when they had just returned from a successful revolution which set out to improve their living standards. Hence, faced with severe food shortages, the Russian government de16

For this purpose it may be good t o study Mr. L. I. Brezhnev's Report to the Central Committee of the C. P. S. U. (March 24, 1965), "Urgent Measures for Further Development of Soviet Agriculture", Pravda, March 26,. 1966.

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vised a new method for improving agricultural production through collectivisation, i.e. by the creation of Icolkhozes and govkhozes. The advantages of this new policy were that the nationalisation of land put an end to privately-owned holdings too small for efficient utilisation of modern equipment, and that the organisation of labour on industrial patterns diminished the retarding influences of traditional farming, making it into an industry subject to the same laws of production as urban industries. In addition, the new methods enabled the State to supply working communities with the best available equipment for specific tasks without being dependent on profit incentives, or to take other measures to encourage farmers to abandon tradition. In theory, state farms were able to solve Russia's agricultural problems. They bypassed the impediments of tradition and lack of capital; they even allowed economies of scale. However, the system was not successful. When, after forty years of collectivised agriculture, Mr. Khrushchev discussed the state of Russian agricultural production, he disclosed that total agricultural output in the Soviet Union in 1958 had not reached the level it held in 1914.16 Moreover, although the agricultural labour force had diminished in proportion to total population, it had increased in absolute figures since 1914 without raising its output, signifying that per capita efficiency in agriculture had not improved but deteriorated. The significance of this may well be that it indicates that technology, even in an administrative framework suitable for improved agricultural production, may not achieve real progress unless it is accompanied by positive stimuli to encourage the human element. It is a point of interest that output on private allotments in the Soviet Union rose much more impressively than on state farms, although with little new equipment in use. In Israel, where a not dissimilar system of collective agriculture developed, the kibbutz, results were different. Here, the collective effort of the members and the utilisation of equipment was highly successful even on poor land. Collective agriculture in Israel was usually more rationally organised than private agriculture in many parts of the developed world and in Israel itself. Hence, it may well be true that human incentives are often more important than

M N. Krushchev, "Theses for 21st Congress of the CPSU", Reported in Pravda November 14, 1968.

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technical and organisational arrangements.17 Obviously, human incentives alone are not sufficient; both equipment and organisational efforts are necessary, but once the incentive is there the rest may be easier. Without proper incentives, the supply of equipment and the imposition of organisation can seldom really revolutionise production. Another type of organisation sometimes recommended to peoples of underdeveloped countries today is that of government-promoted cooperatives, especially in agricultural development. Governments set up administrations, usually on a civil service pattern of recruitment. They bring in administrators from the towns, imposing them on the rural populations in the hope of bringing cooperation to life. Usually, however, the confidence gap between the administration and the traditional leadership is so wide that little real progress is accomplished. The administrator of the imposed cooperative owes no loyalty to the villagers for whom, as a literate, he frequently feels contempt; the villagers have little confidence in him and may even suspect him of being a spy for central government. The lack of success is thus hardly surprising. In a society in which family ties and hierarchical bonds are strong, an outsider always belongs to another group to which, it is assumed, his loyalties come first. He will seldom be able to assess whether or not the villagers have the money to put up some structure which may be necessary for a combined effort. He may not get reliable information because the villagers will suspect him of divulging this information to his superiors who will use it for raising taxation. Moreover, the administrator may not feel any strong wish to experiment or to stimulate cooperation; he will seldom be the direct beneficiary and merit promotion is rare in underdeveloped countries. The local elites may even see in him a competitor for their social hegemony, striving to take away their position of leadership; rather than help, they may from the very outset create an atmosphere which is not conduciye to cooperative action. This happened in many places in India and West Africa when central authorities attempted to promote cooperation from above. It is a sad fact that even where statistical summaries indicate the success of such outside-imposed 17 For Israeli agriculture vide Y. S. Brenner, A Short History Progress pp. 238—63.

of Economic

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cooperatives, the data usually reflect bookkeeping progress rather t h a n real growth of production. I t usually means t h a t output not hitherto statistically recorded is now being registered, thus creating the illusion of progress. Sometimes such efforts t o promote cooperation have directly harmful consequences. They increase villagers' suspicions and encourage them to hide their capacity and real possibilities for economic improvement. Therefore, unless the cooperative framework is rooted in the life of the community and is accepted by the community as part of its heritage and tradition, it is unlikely t h a t any spectacular progress will be achieved. A third type of outside interference, more successful t h a n those mentioned earlier, is the establishment by government of marketing boards, finance organisations, and price stabilising mechanisms. A great many efforts in these respects have been made in both developed and underdeveloped countries with a good deal of success. For example, agricultural credit played a tremendous role in t h e development of farming in Northwestern Europe and the United States of America. The same is also true today of state purchase of farm surplus in America and in some underdeveloped countries. I n these cases, success rests upon the fact t h a t such efforts are seldom contrary to traditional farming incentives; they support even if they modify these incentives, and help farmers to improve themselves without breaking with custom. The success of cash crops such as cocoa, sugar cane, coffee, rubber and groundnuts, to mention but a few, rests mainly on such outside efforts. To be sure, efforts with these crops are easier because a foreign commercial market usually exists even before widespread planting takes place; governments merely step in as intermediaries, collecting the produce from farmers and shipping it to the consumers. The main difficulty with this kind of incentive is its great dependence on world demand, leaving the producers totally at the mercy of markets which they cannot influence. However, as long as demand exists, government can play an important role by organising collection and transportation and stimulating better production. Above all, it can assist both production and distribution by constructing the necessary infrastructure, but this point will be discussed elsewhere. Another way by which government can improve organisation of farming is by providing credit facilities and stations for hiring out equipment. For example, tractor stations have been set up by some govern-

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ments where farmers can hire tractors for a given length of time against reasonable payment. Where such efforts have not been successful t h e cause has usually been poor management and lack of proper maintenance of the equipment. A different kind of imposed organisation is t h a t of private or state-owned plantation farming. Plantations have the most advantages of modern agriculture. They can be staffed with people who specialise in the various branches required for efficient farming, and mostly concentrate on the production of crops which have an established market. Plantation labour can usually be hired or sacked as required, thus reducing underemployment t o a minimum. Unsolved problems with plantations include ownership, demand and diversification of production. Palm, rubber, tea and coffee plantations have been rather successful from the agronomist's point of view and mostly so when privately-owned rather t h a n state-owned. I n recent years, however, even privately-owned plantations have begun t o be economically less prosperous as their primary products are subjected to increasingly tougher competition. Markets for primary products are far from unlimited, and their growth is frequently restricted t o t h e rate of population accretion and income growth in the consuming countries. Prices therefore tend to fall and plantations become less profitable. 18 Where state ownership predominates, productive efficiency is usually much lower. 19 The social and cultural impediments which affect economic progress in underdeveloped countries are also operative on such farms. If managers are political appointees rather t h a n devoted agriculturists, they almost invariably employ people by criteria of social relationships with no regard for labour requirements or efficiency. Moreover, management of such plantations is frequently not subjected to direct cost accounting and therefore is less interested in profitability t h a n in other objectives. 20 I n fact, it is not unusual for the manager of a state-owned plantation to spend many days in town away from the plantation, leaving responsibility for t h e farm to some subordinate who may or may not have the best utilisation of manpower and equipment at heart. I n addition, state 18 Indices of values of agricultural exports from various regions show a fall in value of agricultural raw materials although their volume content continues to increase. Vide F.A.O., op. cit., Tables II-8 and II-9, pp. 30—31. 18 See Report on the Ghana State Farm Corporation. 10 For example, in providing work for the unemployed of the region.

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farm managers are often given little freedom of decision-making and are so constrained by wage restrictions t h a t they cannot recruit the most suitable people. While private plantation owners are normally keen on efficiency and have considerable freedom to use wage incentives, their opposite numbers on state plantations have none of these relative advantages. The state is usually so scared of nepotism on the plantations t h a t it does not feel free t o give its managers anything but the very minimum of freedom of decision-making. This is perhaps more than anything else the cause of the too frequent absence of managerial ability in underdeveloped countries. To be sure, it may be precisely this lack of participation in decision-making, itself the result of the socio-cultural situation which prevents people from being rewarded for the work they do and not for their relationship with their superiors, which impedes the rise of an efficient managerial elite. Sometimes the confusion between prestige and efficiency leads to absurdities which totally frustrate t h e whole objective of state farms as sources of industrialised agriculture. For example, under Dr. Nkrumah's government, t h e manager of a state farm in Ghana was told by the head of the state farm corporation not t o bother him about profitability because this was not his concern. Indeed, the man was more concerned with the appearance of the farm as a showpiece for visitors and neighbours than with whether or not the farm was economically superior t o traditional agriculture. I n fact, a study comparing the profitability of the use of fully mechanised, semi-mechanised and traditional equipment and of the various modes of production in the same region, showed t h a t advantages on the state farm were only marginal. 21 This was the case where private investors used mechanical equipment. Where plantation owners watched their investments keenly and were free to encourage workers by monetary and other incentives, mechanisation was with one exception much more advantageous t h a n traditional farming. The way to make state farms more successful may therefore lie in more decentralisation and in stricter accountability of state farm managers for their profits and losses. Indeed, if farm managers were given a direct share in net profits and greater freedom concerning employment policies, 21 Vide Y. S. Brenner and Yair Roth, "Mechanisation of Agriculture in West Africa", Africa Quarterly 1966.

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the results regarding production targets might be different. Unfortunately, however, the problem of un- and under-employment in regions where state farms exist always places considerable pressure on the government to use them as a means of amelioration. Despite economic reasons which show the need to reduce labour inputs, political reasons force governments time and again to raise employment on state enterprises. Such complications seldom exist on private plantations. These are usually fairly efficiently managed and profitable, but from a national point of view their value is often rather dubious. Even when law requires profits to be reinvested in the country or used in ways which are supposedly advantageous, plantations may still have a negative effect on general development. Firstly, private plantations only produce crops which have secure export markets. Their direct influence on the national development is small and their indirect effect comes through export earnings in foreign currency. These earnings may either be spent on consumer goods which could otherwise perhaps be locally produced, or on necessary goods which cannot be made locally. In the first oase the effect will be negative and in the second positive. But in a country where plantation owners are powerful, it will be very difficult for a government to ensure that the second alternative predominates. Secondly, international competition in most plantation products is becoming increasingly stiffer and information about the best methods of production more and more widespread, so that no-one has a clear advantage over all other competitors; profits consequently tend to be levelled down. The only way by which plantation owners can then retain their profits is to reduce wages to a bare minimum in the hope that their competitors will not be able to do the same. In this way plantations do not enhance the people's living standards, do not make the labour force more affluent and able to purchase other products and stimulate their production, but on the contrary, reduce market demand. Thirdly, plantations have a negative effect on income distribution. Their existence further increases the gap between rich and poor, and at times even raises severe political dangers. For all these reasons it may well be that, on balance, the advantages to be gained from the better organisation and equipment on private plantations are often less valuable from a national point of view than the continuation of inefficient modes of traditional farming. The problem of the desirability of private plantations is ex-

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tremely complicated and depends in each case upon the country or region for which it is recommended. The social and cultural environment, the economic structure, the nature of the crop, and the political backing of the government in the country where such plantations are recommended, all have to be taken into account. In recent years experience has shown that cooperative associations assisted from "outside" were only successful in three out of the many countries in which they were tried,22 i.e. Taiwan, Ceylon and Japan, where farmers participated sufficiently in running the cooperatives to prevent alienation. In all three countries this cooperation also helped farmers to form political pressure groups which forced their governments to introduce legislation preventing competition by private traders and regulating the supply of certain necessary inputs. Yet none of these government-sponsored cooperatives really conformed to the principles of cooperation as they developed in Europe and North America. The most adverse effect on the evolution of cooperatives in the underdeveloped countries was caused by government-organised purchasing organisations, which frequently did not have the necessary funds to purchase all that the farmers brought to them. This resulted in a great deal of disappointment and reduced incentives for greater efforts and efficiency. The only country to solve this problem is Japan, where the government gave the necesuary security to the banks to enable them to advance credits to farm cooperatives so that the latter might invest more heavily. Each farmer was given an account with a local multi-purpose cooperative from which he could draw money up to an agreed level, and which was cleared by the cooperative out of the proceeds of sales. In Taiwan, Ceylon and the Republic of Korea, where similar arrangements exist, success has been less obvious than in Japan. The main reason for this may well be that their marketing arrangements are far less developed and effective farm credit is usually dependent on successful marketing. Another point to be remembered is that in Japan these credit arrangements developed long before the country had reached its present industrial level, thus making it a particularly interesting example for underdeveloped countries. Moreover, land holdings in Japan are among the smallest a

Vide F.A.O. op. cU., pp. 61—64.

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in the world, a point which shows that even small-scale landownership can be successful if credit arrangements are suitable and the general situation encouraging. However, it would be unwise to advocate the transplantation of Japanese arrangements to other countries without very careful examination of local conditions and careful adaptation to specific circumstances. It appears from the foregoing that the most important element for the developmental organisation of farming is financial incentive. Once a stable and secure market for agricultural surplus exists, farmers usually learn fairly quickly to take advantage of it. They will also find ways to receive the inputs necessary for promoting production and productivity. The discovery of the right mixture of outside assistance and indigenous organisational growth is therefore of primary importance. Outside stimuli — government assistance — can help incentives, and indigenous stimuli to progress can result from adapting traditional frameworks to new situations. Governments can best contribute by setting-up purchasing stations to buy all the farmer brings to market for ready cash at stable and positive prices, and by instituting credit facilities at reasonable rates of interest against the security of land and future crops. Government may even regulate farm production by offering higher prices than the economic value of the produce if transfer from one crop to another is deemed essential for diversifying the economy. For this it may use state revenue to make up the shortfall of foreign aid. In addition, government can help increase the production of proteins by differentiating between prices paid for crops which should be produced in greater abundance and those which should rather be discouraged. Finally, government can stimulate the organisation of farmers by dealing more readily with collectives than with individuals. It may offer loans for farming equipment only to farmers who hold sufficient land or to groups of farmers who can jointly put it to efficient use. It may make credit available or underwrite bank loans only for cooperatives which fulfil certain minimum requirements of a collective nature. And it can provide developmental structures such as silos, water reservoirs etc., which would be handed over only to representatives of a collective. The government may even offer places in agricultural schools or training centres for operators of agricultural equipment, to persons elected by their village communities by common

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ballot. Even infrastructural investments may be selected by the government with a view to promoting cooperation. For example, it may finance the construction of a dam provided the villages which will benefit from it supply the necessary labour force free of charge. Yet the state should never interfere with farmers' attempts to use their cooperation for the promotion of political pressure groups, such groups being the only way by which the policies recommended earlier may be implemented in face of opposition by other powerful groups; without pressure by the farmers, these powerful interests are bound to attempt to frustrate necessary developments. 23

23

See Part Π.

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IV C U L T U R A L , INSTITUTIONAL A N D P O L I T I C A L IMPEDIMENTS TO P R O G R E S S I N A G R I C U L T U R E

Cultural impediments to rural development are frequently thought of in terms of levels of education, and institutional or political impediments in terms of economically harmful systems of land tenure and poor allocation of national resources. This is true but is not the whole truth, reflecting as it does the symptoms of the disease and not the source. For example, in England and the Netherlands agriculture progressed much earlier than in other European countries. What caused the delay and what were the impediments to emulation? The answer to this question, which is equally relevant t o industry, is complex and touches upon many factors which have little direct connection with economics. To begin with, one may study the relationship between science and technology. Science was no less advanced in France than in England by the mid-19th century, but its large-scale technological application came much later. The same can be said of Germany and even more so of the rest of Europe. Historians tends to ascribe this discrepancy to the different cultural heritages and political circumstances. In English society the title to landownership, particularly amongst the aristocracy, went only through the eldest son, jus primogenitura, whereas in many parts of the continent land was divided between all children of the deceased landowner. Landownership in England was therefore much more consolidated than on the continent, and was subsequently more amenable to the introduction of improvements and the use of modern equipment. Moreover, as the second and third sons of the English aristocracy had no title to land, they frequently went into commerce and manufacturing, lending this class much greater social fluidity than was common on the continent. In England it was not uncommon for a brother who had been in commerce to succeed to the land of a deceased first son; being accustomed t o

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business life, he introduced a new spirit of economically rational behaviour to the hereditary farms. Further, as land was not only a fairly safe investment but also conveyed prestige upon its owner (as long as he did not actually work it himself), wealthy businessmen often acquired land for its prestige and income value. Thus the greater fluidity of English social relationships probably played a significant role in transferring urban economic attitudes into the rural countryside. This could hardly have happened on the continent of Europe, where the situation was very different and prestige far less attached to land and more to office. The acquisition of land, though considered a safe and dignified investment, was seldom looked upon as a source of prestige and business in the modern sense. The prestige which arose from landownership lay more in the legal obligations of tenants towards their lords than in the land itself. 1 The income from land related to farmers' legal obligations which could not easily be altered to conform with changing prices and costs of living, and were therefore of little encouragement to landlords to invest in agricultural improvements. In short, in England a landowner could augment his income by investing in farming, while on the continent such an investment would seldom yield him real advantages. In England there was a great deal of social fluidity between commercial and landowning members of society which rarely existed on the continent. Members of the British aristocracy engaged in commerce, which produced a different attitude to money-making than that common in conti* The celebrated Jus primal noctis is perhaps the most quoted example. A well-intentioned comment made b y a friend and colleague: "The point surely is that prestige = income. Clockmaker's son Carron buys a wood called Beaumarchais. He actually sold the timber, but more important, he became Carron de Beaumarchais. Now he could hold a court sinecure, with a small income and, again more important, with access to the best people: they give him a secret service assignment (gun-running to the American rebels) from which he makes a fortune. In England, if he had been able to raise the capital, he might have tried gun-running direct; in France capital alone would not have sufficed against the wishes of a highly efficient civil service; and equally the office of Capitaine de la Viande du R o y was capital, because it obliged capitalist Paris-Duvernay to work through him. (And the P&ris brothers' capital came from tax-farming, which was impossible without intermediaries such as Beaumarchais or Madame de Pompadour). French aristocrats did not consider money-making undignified, but the State was the honeypot, not trade. So trade was undignified."

7*

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nental Europe. French aristocrats engaged in court activities, military service, the administration of justice and politics, but considered it beneath their dignity to soil their hands in commerce and manufacture. Even those who became rich in commerce were seldom fully accepted as equals by the upper classes although some managed to buy themselves into the social elite by contributing generously to the Royal Coffers.2 The Englishman, as distinct from the continental, developed very early an attitude towards money as being a means to a purpose rather than a status symbol. Business failure, not unlike gambling losses, did not involve loss of social prestige. On the continent, business failure was always taken as a sign of personal guilt and detracted from a man's social position. Social stratification in England, where second and third sons moved easily from one class to another and the acquisition of land was much less rigidly regulated, did not totally exclude the possibility of rising in status through acquisition of wealth. The English middle class and aristocracy thus developed very differently from their equals on the continent where richer merchants were not really keen on buying or investing in land but were more eager to buy offices which could raise their social status; they also formed their own closed class which they jealously protected against invaders from below. In fact, their inability to penetrate the aristocracy led them to develop their own code of behaviour, further separating them from all those poorer than themselves or with different back* Another comment by the same colleague. "This mis-states the position. a) You could never be treated as an equal by a de Rohan except by being born a de Rohan, b) You could mix freely with the de Rohans if you had enough money to buy and to maintain a 'charge' of sufficient importance. You then became 'noblesse de robe' — after 'noblesse d'epee' in precedence, but still 'noblesse'. After three or four generations of intermarriage the distinction disappeared — the dues de Richelieu or de Pasquier were almost exactly parallel to our earls of Bedford (Tudor creation: Henri IV creations.) Nor did you 'contribute generously' to the royal coffers: the whole business of 'charges', though disastrous to France as re-channeling bourgeois capital out of productive investment into state employment, was perfectly above board. To buy a 'charge' you loaned to the Crown that sum which would, if invested, usually at 10% interest, have produced an income equal to the salary attached to the office (usually calculated over 20 years). What was unholy was that the Crown obtained your services free in this way: and as a result had to turn a blind eye to your spare-time pocket-filling. But if you did not invest your money in consols in this way, you did not enter the 'social elite* — like the brothers P&ris."

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grounds. City merchants felt superior to villagers and therefore had not only little economic incentive, but also no social wish to engage in activities which could connect them closely with a rural environment. Indeed, contempt for rural ways of life even found linguistic expression in the usage of words such as villein, peasant, boer etc., disparagingly used by townspeople to imply stupid or uncouth behaviour.3 Hence, the merchant or manufacturer in continental Europe separated himself culturally from the rural community and simultaneously emulated the behaviour of the aristocracy which he was unable to penetrate. For this reason, manufacturing and trading classes in continental Europe developed a specific code of social requirements. Firstly, a member of this class had to show competence in the trade he pursued; traditions of craftsmanship and professionalism in trades dating back to the Middle Agee became the hallmarks of society. Secondly, he had to be able to adopt pseudoaristocratic modes of behaviour. In other words, social status became closely related to professional accomplishment and behaviour.4 English merchants and manufacturers engaged in their professions merely as a means to an end — the acquisition of wealth; on the continent, members of the same class frequently looked upon the acquisition of wealth as merely coincidental to the higher aim of gaining the prestige which comes with workmanship and production. Economically, therefore, continentals focused their attention upon per unit value of production, whereas their English counterparts were more concerned with total profitability.5 An economic consequence of these different attitudes was that the Englishman had few moral scruples in underselling his competitors to the point of their economic ruination if, in the long run, this meant greater profits for himself. Not so the continental who considered it unfair and socially disgraceful to undersell his competitors. Hence, whereas in England competition encouraged productive efficiency to rise to the level where only the most efficient s

The similarity between the contempt shown by the educated of underdeveloped countries today for the illiterates, and that shown by the European bourgeoisie in the 18th and 19th centuries is quite striking. 4 Moliere, Le bourgeois gentilhomme, gives a good example of this kind of problem. * See Professor D. S. Landes' excellent article on this subject in The Cambridge Economic History of Europe (Cambridge 1966), Vol. VI, Pert I.

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could compete and all others were driven out of business, continental ethics levelled off efficiency much closer to the bottom of the scale, where the least efficient were still able to produce. Another economic consequence of these differences was that continental businessmen did not invest in agricultural production. The Englishman who was keen on profit had little concern for its sources; it was of little interest to him where and how he got it. Not so the continental businessman whose main object was prestige; from this point of view, his family business was as much his concern as the conduct of his sons. To invest even profitably in agriculture would have connected him too closely with a class of people which he and his peers considered with contempt: the peasants. From the social viewpoint, even success in agriculture could not compete with the tradition-honoured prestige which came from successful engagement in manufacturing and trade. Thus, legal arrangements regulating income from land and the social traditions apportioning various levels of prestige, were different in England and on the continent, being subversive to investment in better agriculture in the scond case. Yet another important cultural factor contributed to the continentals' reluctance to invest in agriculture. This was the legacy of medieval "one man one job" traditions. Proverbs such as "Jack of all trades, master of none" are illustrative of this particular frame of mind. Europeans set great store by family tradition and traditional occupations. Many who became rich in trade never considered investing even part of their money in any other kind of business. A psychological gap prevented them from making investment decisions in accordance with criteria of profitability in preference to tradition. They ventured rarely into new fields in manufacturing, and almost never into areas with which they had no previous connection. Even the most enterprising among them, those who shifted funds from one manufacture to another or from manufacture to trade and back to manufacture, were most reluctant to invest wholly outside their socially-accepted trades. As far as the farmers were concerned, the incessant subdivision of traditional family holdings made individual farms usually much too small to permit the acquisition of sufficient wealth to invest in really worthwhile improvements. The large farms which dominated landownership in the south of France, for example, belonged either to the church or the aristocracy who, as we have seen, had little interest in devel-

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oping them and even less to gain from doing so. Agricultural progress was consequently delayed until cooperation started from below, stimulated by the growing market demand in the industrialising towns. There were exceptions, of course. In a number of places, for example Prussia and the Ukraine, the local aristocracy took a rather greater interest in agricultural production but under different circumstances. There was little if any industry, a scarcity of population, and consequently a relative abundance of land. This land was owned by traditional aristocrats, whose legal hold on the land and the population was such that their share of the produce easily sufficed to support them without actually forcing them to engage in the everyday responsibilities of farming. The fertility of their land and their direct control over the people enabled them to reap great surpluses of produce for export sales without improving farming practices. Not unlike the ancient Romans who led a parasitical existence on the fruits of the labour of an enslaved world, the Junkers of East Prussia contented themselves with what they could get without extra effort. The growing supply of cereals from East Prussia and the Ukraine during the 19th century therefore cannot serve as a representative example, rising agricultural output being directly related to the accretion of population and growth of the labour force, and to the gradual improvement of the transport system, above all to the penetration by the railways into these regions. The same is true of those parts of Russia where non-aristocratic landholders, frequently referred to as "Kulaks", exploited the land and labour force. Agriculture progressed most successfully during this period in North America, where few of the traditional social impediments were sufficiently strong to prevent rational exploitation of land and labour. America was a large, fertile and very thinly populated continent. In addition, the successive waves of European emigrants included people who were less tied by fetters of tradition than the brethren they had left behind in the Old World. If we remember that by coming to the New World these people had already shown that they had the initiative necessary to break with the relative security of background, families and surroundings in Europe, the selective nature of this manpower supply is fairly obvious. Their subsequent progress westward in search of new fertile land further

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enhanced their inventiveness and initiative and fostered in them an unusually high degree of self-reliance. A family moving with its wagon train westwards could not rely on a man of exclusively one trade: if a wagon broke down the men had to repair it or to invent some other means of transport for continuing their journey, as otherwise they would probably die. The need to protect themselves against enemies — animals, Indians or even their own kind — with no traditional safeguards of family or state, further encouraged them to be self-reliant and stimulated the state of mind which made them alert to economic opportunities. Finally, the absence of traditional class structures and the almost total lack of firm hierarchical relationships opened the way to new sources of social distinction more related to the individual's ability than to his lineage or social background. As a result of these social and cultural peculiarities of American settlement, a community developed in the New World which was free of the restrictive influences of European history and which distinguished itself by applying mind and effort to material advantage. From a traditional cultural point of view, the new American may well have been a rather unpleasant spectacle: his lack of reverence of tradition, his excessive self-reliance, and his modes of behaviour could hardly have roused the admiration of the European upper or middle classes; but from a purely economic point of view, that of increasing production and productivity, the American was a most desirable species of humanity. Unlike the western and central European, the American farmer faced a shortage of manpower; relative to the good land he could exploit, the people available for employment were far too few to allow maximisation of profits. Laboursaving equipment was consequently first introduced on a wide scale and successfully developed and improved in America. So much for the general cultural background which impeded rural progress in the history of the economically more advanced countries. Let us now consider some of the more direct, legal and institutional impediments which are still with us. Firstly, land tenure, adverse systems of which are perhaps the most important factor in hampering the growth of agricultural production. In many parts of the world the tenure system is specifically responsible for leaving the farmer only a small share of the fruits of his labour. At the same time, negative systems of land tenure are not universal and are

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therefore not solely responsible for ineffective agricultural production. However, they are particularly widespread in some countries or regions where population pressure is severest and productivity of land and labour very poor. The specific conditions of exploitative land tenure agreements are so varied that they cannot be enumerated. Sometimes farmers are subjected to continual harassment by landowners who demand increasingly higher payments; neither tradition nor written agreements nor even government legislation can prevent these landowners from raising rents whenever they discover that their tenants have been able to increase their earnings. This reduces tenants' incentives to improve their agricultural practices and leads to stagnation. At other times and in other parts of the world, tenancy takes the form of share-cropping with farmers contributing the inputs, labour, seed, equipment etc., and the landlords little else but land. If farmers manage to increase their yields, part of the additional income goes to the landlord who contributed nothing to bringing it about. As the extra output has to cover both the expenses for new inputs and the relatively increased share of the landlord, too little is frequently left as net advantage for the farmer to make the whole exercise worthwhile. Equally, if landlords of share-cropping land wish to invest in order to raise output, their incentives will be subject to the same negative influence. In the landlords' case too, the inputs may not suffice to increase output so far above the cost of new investments that a reasonable net profit is left after part is disbursed to the share-cropping tenants. Hence, fixed payment tenancy and share-cropping tenancy both contain strong elements of disincentive to agricultural progress in many underdeveloped countries. In the first case the farmer fears that more affluence will lead to higher rents. In the second, both farmers and landlords fear that investments will increase the profits of others who either cannot or will not invest and will make little difference to those who do. A major problem is therefore security of tenure: a very thorny problem indeed to handle in practice. In countries where tradition lays down the rule and is adhered to, landowners usually have little incentive to invest and leaseholders seldom have the necessary money to do so. In countries or regions where tenancy rights are not fortified by custom and tradition, or where they crumble under pressure of population accretion and a rising demand for land, farm-

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ers have no real de facto protection against the rapacity of landlords and repeated rises in rents. Even where the state attempts to prevent abuse of customary rent agreements, it is seldom able to do so effectively; farmers will find ways and means to circumvent legal forms if it is necessary to do so to get the land needed for their livelihood. Under such conditions landlords will have little oause to adhere strictly to government regulations which run contrary to their direct interests. In some parts of the world, the situation is no less complicated though basically different. In Africa, other than in the Middle East or parts of Asia, the land does not usually belong to large landowners but is the communal property of a tribe, village or extended family. Here again, the initiative and incentive of the enterprising individual are reduced by his inability to overcome restrictive traditions and the heavy-handedness of the elders and leaders of the community. As cultivation is frequently rotative, the community rarely finds it necessary to invest in a particular area. In addition, many corvee-type duties prevent the development of direct incentive to invest in particular areas. I f we assume that legal and political institutions may more easily be changed than cultural traditions, development prospects may well be better in countries with private landownership. A further problem, most common in Latin America, concerns the inequality of landownership. Sizes of holdings differ in the extreme: very small farms are found alongside large latifundia, and this again has a considerable effect on incentives for development. Small overpopulated farms, at the given inputs, may adjoin extensive latifundia which cannot be fully exploited owing to labour shortage. Cultivators may not find sufficient work on the small farms, while the wages offered on the large estates are frequently too low to encourage surplus labour to move from the small holdings. A peculiar semi-feudal arrangement sometimes develops under which a farmer receives land for self-cultivation in lieu of the labour-days spent on the latifundium. Unfortunately, such labour is rarely efficient, as witnessed by the historical precedent of medieval Europe. Wherever transport facilities are reasonable and the landowners can sell their produce on cash markets, the tendency is therefore to replace labour by mechanical equipment; this again reduces the employment opportunities open to the poor.

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The combination of population pressure on small holdings, the existence of large estates with insufficient labour for proper cultivation, and on the other hand, the rapid increase of rural population causing continuous subdivision of holdings or reduction of fallow, has given rise to politically explosive situations in Asia and Latin America. Land reform is consequently urged from two directions. From below, by cultivators who increasingly demand ownership of the land they cultivate and, by implication, the abolition of rents and other habitual payments. From above, by governments which either feel direct responsibility for the welfare of the farming population and appreciate the objective need for land reform, or which increasingly realise the danger of the existing situation and try to forestall civil war and bloodshed by taking some steps towards improving the tenure situation. Again, politics and economics become involved with each other on this issue. These governments face the unfortunate paradox that, while little can increase agricultural productivity more effectively than giving farmers security of tenure and ownership of the land they cultivate and assurances that they will be permitted to retain a good part of their increased output, it is fairly obvious that even with much initiative and effort, farmers with small landholdings have little chance to raise production and productivity. Governments are thus faced with a politico-economic choice between favouring smallholders in the hope that better security and title to their lands will help them raise per capita and per acre output by a reasonable margin, or supporting the big landowners who, given the incentive, will find it easier to raise productivity and output considerably. Superficially there seems no reason why these policies cannot be implemented simultaneously, but a more careful analysis of market demand and political pressures indicates that this can rarely be successful. In Russia, where the large estate farming policy was adopted, the desired results were not obtained. In other parts of the world, particularly in the Sudan, parts of India, Ceylon and Taiwan, the policy of state interference to give better security to smallholders has not been universally successful. In Russia, incentives were apparently diminished by the state policy; in India and other countries the government was never sufficiently strong to see that its policies were properly implemented. The crux of the matter is probably the notorious inability of farmers to organise

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and raise their organisational achievements to a political level. There are few governments of underdeveloped countries which do not depend on the towns and powerful landowners for support. Even when rational, economic and social motives or fear of unrest persuade governments to legislate to improve farmers' conditions, they must always do so without the pressure of a real force to make the legislation effective. Even such moderate improvements as a legal ceiling for rents are seldom properly implemented where most needed. The poor farmer, keen on land and competing for its tenure with other prospective tenants, will hardly avail himself of government legislature to prevent rents above the legal level being extorted from him. If he insists, the chances are that he will not be given any land. More often than not, the person to enforce state regulations is by virtue of Iiis status in the region or rank in the civil service, much closer to the rich landowners who can bestow favours and protection upon him, than to the poor farmers who cause him nothing but trouble. Rent control is therefore extremely difficult to enforce. This was the case in the Philippines and in India during the 1950s when great efforts were made to enforce rent control, while it was only slightly more successful in Ceylon where it was introduced on paddy rice land in a fairly sophisticated form. Ceylonese law stated that whenever yields increased on share-croppers' land, as a result of additional inputs, the extra output was to be shared between the landlord and tenant proportionate to the share each had contributed to the new inputs. Hence rent was taken as fixed and additional inputs were encouraged by letting both the tenant and the landlord share in the advantages. This arrangement, the Paddy Lands' Act of 1958, was connected with another provision restricting rents to the value of a quarter of the normal output. The act could hardly have been implemented as successfully had it not been for the simultaneous establishment of farmers' committees to supervise the arrangements. Even BO, success was only modest; the committees seldom dared to run counter to powerful landlords, who in time managed to circumvent both rent control and sharecropping arrangements by evicting habitual tenants and bringing in others who had little influence with the committees. When land is scarce, the threat of eviction is always the most powerful weapon in the landlords' armoury against the implementation of progressive land reforms. The only solution for agricultural progress may

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well be the large-scale organisation of farmers with deliberate political objectives. However, this seems to be very difficult and is rarely supported by a ruling government. The problem was discussed extensively at the United Nations F. A. 0 . World Land Reform Conference in Rome in 1966. Despite all the difficulties, it is a fact that in a number of countries, including Taiwan, Japan and the United Arab Republic, where land reform has been accompanied by the development of other auxiliary services and institutions, the rise in production has not been insignificant. In the U. A. R., yields on expropriated land were about 4% higher than in the rest of the country. In the much older Gezira scheme in the Sudan, results were also satisfactory although not impressive in relation to what might have been achieved if tenants had received better titles to their land. Again, however, if land titles had been stronger, there would have been little assurance against farmers finding means and ways of selling the land and thus returning it to the old latifundia owners. In Iran, where arrangements are not dissimilar to those in the U. A. R., the sale of land to individual farmers was conditioned by their first joining some kind of village cooperative responsible for farming credits. Land reform deals with at least two of the most important elements of development. It can increase efficiency which, in the development economist's terminology, means productivity or utilisation of available resources, and it can increase equity which, again in his terminology, means improved distribution of wealth. Efficiency is promoted by land reform through increasing the farmers' incentives to work and invest more, while equity is promoted by distributing land among a greater number of people. Theoretically, however, support for land reform raises an interesting economic problem. Promotion of efficiency and of equity may run contrary to each other. Assuming that national income must in the long run always be equal to consumption (the total spent by the people for immediate use) plus savings (all that they do not spend), and further that savings form the strategic factor necessary to raise the efficiency of production because they can be turned into investments, and that investment is the means by which output can be effectively increased, the question arises whether the achievement of more equity, the better distribution of landownership, will not detract from savings, from the funds which could go into productive

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investment, and be turned into unproductive consumption.6 More simply, might not the distribution of land and higher incomes for farmers reduce the ability of a nation to save ? Is it not possible that because there are given limits to consumption, the very rich may be in a better position to save than the very poor for whom increases in income may merely mean the satisfaction of immediate needs without saving and reinvestment? The question is purely theoretical and irrelevant in practice because it ignores a number of factual observations. In reality, the assumption that savings will of necessity turn into productive investment may not directly apply to underdeveloped countries, though it does of course apply in the long run and under fairly close circumstances to developed societies. In the reality of underdeveloped countries, the equality of savings and investment may often be falsified by a number of factors which are less relevant elsewhere. In the first place, the saver may not act "rationally to maximise his income" because he prefers prestige to economic advantage. Moreover, as there is frequently no real advantage to be gained from investment in underdeveloped countries, savers acting rationally to maximise their profits are inclined to shift abroad where returns on investments are higher. Investment then will not directly affect incomes in the savers' countries. Secondly, as international competition for most products exportable from underdeveloped countries is becoming greater, increasing home investment in their production may lead to falling prices which over time will diminish rather than increase the investors' profits. It is for these and other reasons that in the underdeveloped countries, particularly in their agricultural sectors, the promotion of equity, i.e. of better distribution of income, may have a more progressively developmental effect on the economy than higher concentration of wealth. This may be so because better distribution of incomes can raise consumption, "effective demand", particularly when it is accompanied by redistribution of land which, with firm ownership titles, may lead to incentives for efficiency. e

T h i s is the wellknown proposition that Y =

c +

s

and Y - C + I hence S = I where Y stands for National Income, C for Consumption, S for Savings and I for Investment.

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The resulting higher market demand may then encourage those beat able to save to invest locally either in the processing and marketing of agricultural products, or even in industrial consumer goods production. Politically, such a policy may be able to unite both poor and rich in support of government efforts to protect the growth of local industries. A very important aspect of land reform which cannot be ignored is the compensation or lack of compensation paid to landowners for appropriated land. In some countries, land reform is preceded or accompanied by a revolutionary movement and this problem hardly arises. Landowners are deprived of their titles to the land and the farmers who cultivate it are given rights of occupation. But where for political or other reasons landowners are given compensation, the question arises of how this should be done and to what amount. Usually the amount of compensation will depend upon the political pressure that the landowner class is able to exert upon the government at the crucial time, upon the general economic conditions of the country, and upon the quality of the land. The form of compensation is more complicated, because the paying out of large sums to a group of people may result in grave difficulties for the economy as a whole. In Japan, for example, compensation payments to landlords were fairly high but were followed by inflation which offset their actual value. Moreover, most payments were in the form of low interest government bonds, which further prevented them from diminishing state revenue to a danger point. In Taiwan, landowners were given 30% of their assessed land value in the form of shares in government enterprises. This not only permitted them to earn profits, but compensated them for losses occasioned by the monetary inflation which accompanied land reform and diminished the value of the 70% paid in government bonds. A particularly interesting feature of these Taiwan bonds was that they were redeemable over ten years in kind, i.e. in rice or other agra-produets. At the same time, the beneficiaries of the reform, the Taiwan farmers, had to pay for the land in ten annual instalments, also in kind. Full title to the land was given to them on payment of the first instalment, but resale of the land was made illegal until after the tenth instalment had been paid. In the Philippines, land reform was accompanied by special arrangements to encourage landlords to invest up to 90% of their compensation in the clearing of virgin land. Unfortunately, few landlords availed

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themselves of this opportunity, the majority prefering to live on the annual payments as rentiers. A further problem which needs mention because it may have a negative effect on land reform is the uncertainty with which it is sometimes accompanied. Once landowners become aware of the danger to their property they will start neglecting it. As farmers will not yet have acquired secure titles, they will be equally reluctant to fill the gap, even if able to do so. It is thus essential that land reforms be carried out as quickly as possible. Frequently this is frustrated by the landlords who will use legal and even illegal instruments to prevent the passing of the necessary laws. In addition, the technical problems involved in land redistribution cause considerable delays, particularly where no real legal and measured tenure documents exist to guide the surveyors. Another administrative instrument which can have some measure of success in promoting agricultural growth is taxation, which can be discriminately applied to promote investment and to discourage large-scale land ownership. In reality, however, the situation is rather more complicated. In many underdeveloped countries land tax serves less as a means for regulating the economy than as a source of government revenue for payment of its services. Hence a set income has to be received from farmers. Any increase can have negative effects on incentives for production and on production itself via the reduction of profits and consequently of necessary inputs. In fact, in some underdeveloped countries reduced taxes increase productive efficiency in the rural sector while higher taxes usually diminish it. As a rule, this applies only to countries where the population has reached a degree of land exploitation in which only additional inputs can increase the yields. In these cases, increased taxation usually reduces inputs whereas reduced taxes stimulate them. In the early stages of the transition from subsistence farming to a cash economy it seems more usual for higher taxation to increase production and productivity provided, of course, that the level of land exploitation has not yet reached the possible maximum with the available production methods. A discriminative tax on unexploited land in areas suffering from land shortage and absentee-landlordism is always recommendable. The trouble then is that absentee landlords and owners of great stretches of uncultivated land are usually very powerful in the national political structures and can therefore seldom be really heavily

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taxed. Moreover, the possibilities of evasion by fictitious returns are fairly large. History is well acquainted with the effective evasion of taxation laws. In the Middle East, in what used to be the Turkish Empire and where Turkish land laws still exist, it is common practice for a landowner to plough one or two furrows through his miles of land as evidence of "cultivation". Similarly, the retention on the land of a small number of people, usually watchmen, is often accepted as evidence of land use. Most important, however, inasfar as the implementation of laws is concerned, is that very few people in such countries find the courage and the practical possibility of bringing such evasions to the notice of the authorities. Yet discriminative taxation should not be totally ignored as impracticable because from time to time and under suitable circumstances it may still be useful for the encouragement of better cultivation. Another method, found more useful in a number of cases, involves the payment of bonuses or the abolition of taxes on lands on which positive action is taken for improvement. In some countries, holdings which are well-utilised with obvious inputs are exempted from land tax. For example, desalinisation exempted Iraqi landowners. In others, particularly in South America, newly cultivated land and irrigated land are frequently exempted from tax for a number of years. In Thailand and a few Latin American countries, for example the Argentine, uncultivated land is taxed twice as heavily as cultivated land. Although this should be a reasonable incentive for production, it is sometimes a source of political discontent because richer farmers obviously find it easier to improve cultivation and thereby to gain exemption from taxation; poor farmers are consequently penalised for their poverty. In fact, a variety of taxation methods have been designed to encourage better farming and land utilisation in different situations, giving rise to as many different methods of evasion. Here and there, however, the method has proved effective; given a suitable political climate and a detailed implementation plan, it may be most useful for the encouragement of rural progress. The last problem to be mentioned here regarding institutional impediments to economic progress in the rural sector is the difficult matter of credit facilities. Credit plays an important role in the improvement of agricultural production and the demand for credit 8 V—93

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grows with the progress of development. Obviously, a subsistence farmer needs less cash and credit than his more developed colleague who produces for a market economy. Yet the latter needs less credit than the most developed farmer who may plan his production years in advance. Another problem is that of security. Borrowers are often too poor to provide effective security and the lender finds it very difficult to recover his loans in societies which have no effective debt-collecting mechanism. Moreover, administrative difficulties plague lending institutions, whether they be government boards or private bankers. Thus, lending becomes a very complicated business in underdeveloped countries. Administrative inefficiency may even discourage farmers from approaching state institutions set up purposely to assist them. For these reasons, noninstitutional lending, e.g., by moneylenders whose services are always extremely costly, usually fills the gap. Most borrowers in underdeveloped countries try to obtain credit from relatives or, if that is impossible, from their landlords. Only when that is impossible do they go to the moneylender, usually a small one. Such non-institutional sources of finance provide about 80% of all credits in the majority of underdeveloped countries. Non-institutional borrowing from members of the family needs no further explanation. Borrowing from the landowner frequently turns the borrower into a kind of serf, who may eventually lose all he has to his landlord. The third kind of credit, that provided by the professional moneylender, is the most complicated and important. Its advantages are that it is immediately forthcoming and does not raise any social complications. The lender, having little redress for defaults or positive social contact with the people who take his money (usually he does not belong to the particular group of society in which they live), is forced to demand high interest rates. In fact his rates are exorbitant, and the social relationships which develop between himself and the borrowers are usually of the worst possible nature. This adds a particular poignancy to borrowing and lending, causing the system to work even less smoothly than it might. The farmer will avail himself of such credit only if he cannot do otherwise. He will go to the moneylender and pay the usurious interest rates when faced with hunger or if he has no seed for the next season; he will not go to him for credit to make positive improvements to his land, even in the unlikely case that it would enable him to raise his output by a margin which

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would justify payment of the high interest rate. From this point of view, then, non-institutional credit arrangements have little progressive effect. In addition to these non-institutional credit arrangements there are a variety of others, no less unpleasant, such as selling the crop before it is grown. This is very common with tree crops in part of the Middle East. The merchant comes to the farmer early in the season, assesses the likely produce, and offers a sum of money in advance for the whole crop, thus enabling the farmer to pay for labour, irrigation, etc. and reducing his risk of loss from crop failure. From the buyer's point of view it is a gamble, from the farmer's a kind of credit and insurance arrangement — though usually a rather expensive one. Another example of a similar kind of credit may be taken from West African fisheries, where the owner of a boat, or even a moneylender, may come to an arrangement with fishermen by which he supplies the boat and nets and the fishermen the labour. The owner of the boat, or the lender, then gets twothirds of the catch and the fishermen share the rest. In current terminology, one-third of the catch is for the boat, one-third for the owner and one-third for the fishermen. Again, in countries in West Africa where most of the land is not held individually but by communal arrangements, moneylenders find little security for their loans and charge very high rates of interest. The best way to overcome these impediments of insecurity leading to high rates of interest and exorbitant demands, is to spread institutional credit arrangements; in other words, governments should directly support either cooperative financial institutions or commercial banking. That this is possible can be shown by a brief review of credit arrangements in colonial days when governments were interested in stimulating the production of some particular primary products. In Ghana, for example, during the last four decades before independence, banks readily provided loans for cocoa farmers at no more than 2.5 to 4.5% interest. Loans for other purposes were usually either unobtainable or had interest rates ranging from 10 to 33%. The argument usually put forward in eupport of this discrepancy was that cocoa gave more security than industrial production. While this may be true or not in view of the land tenure system in the Gold Coast, it certainly implied a specifically colonial attitude, i.e., that some countries are more suitable for producing certain goods which incidentally have a ready market in the mother

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countries, and less suitable for producing other goods which might be competitive. A national government can change such priorities and accept higher risks if it appears to be in the national interest. Unfortunately, few governments of underdeveloped countries have mentally broken with their colonial outlook in these matters, and few underdeveloped countries which have no colonial legacy are free of a politically strong upper class which is interested in a status quo. The fact that such specifically favourable credit arrangements as mentioned in connection with the Gold Coast yielded outstanding beneficial results should indicate their significance. The experts commissioned to study agricultural credits in underdeveloped countries claim in their report that the lack of success of institutional credit was only partly due to actual shortage of financial resources, and equally to the absence of welltrained staff, to a great deal of red tape, and to lack of supervision.7 This made the system unattractive for farmers and economically unsatisfactory for the government. Only in Japan where such institutions were directly connected with the successful cooperative movements, did they make good headway. The poor performance of institutionalised lending institutions in the past merely pinpoints the organisational and political deficiencies of their structures and does not prove the impossibility of putting them to better use in the future. However, this problem should not be studied theoretically from afar but should be examined in each case with due regard for the specific political, social and historical circumstances. Mention must also be made of the political impediments to agricultural progress. Political circumstances in underdeveloped countries differ, but political leaderships have much in common. They usually do not represent the direct interests of the majority of the people they rule. In ex-colonial countries the majority of people are employed in agriculture, a smaller number in services, and very few in industry. This imposes a peculiar political system. With too few industrial workers to rely on for popular backing, the new governments usually depend heavily on civil servants and the military. At their best, such governments are for the people, but not of the people or by the people. At their worst, they pay lip-service to progress, but in reality rule for the few and by the few. In the 7

F. A. O. Agricultural Studies No. 68.

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ex-colonies, the civil services inherited political hegemony from the colonialists. The military, normally belonging t o the same class, provide physical protection, and t h e towns, insofar as there are any, provide a constant threat to stability. As the immediate interests of the townsfolk run contrary to the interests of the farmers, because the former require employment and cheap food and the latter good prices for foodstuffs and less taxes for providing urban employment, a political paradox dominates all state activities. I n underdeveloped countries with no colonial legacy, political hegemony usually belongs to the few great landowners who are supported by the military. Here too, planners have to allow for growing town populations and may be less concerned with the rural masses. As under these circumstances, any progressive efforts t o promote agriculture usually involve a temporary reduction of profits for the rich or a fall in real incomes for the administrative class, as well as higher costs for the townspeople, an inbuilt mechanism restricts progress in agriculture to a minimum. 8 As the industrial basis in such countries is of necessity very thin, there is little opportunity for agriculture to sell much of its produce to the towns which have little to give in exchange. A tendency can then be observed which relates promotion of agriculture t o the development of export crops. I n theory this may be reasonable. I n practice it usually earns foreign currency to pay for the increased welfare of the minority whose political placing enables them to lay their hands on it. I n other words, the promotion of agriculture for export has a clear "class" content; it serves the interests of administrators and soldiers and, to a smaller extent, the townspeople who have t o be bribed by low prices and the provision of employment t o acquiesce with the situation. I t is seldom to the advantage of the farmers, who have to produce and sell under conditions of stiff international competition. Only in a few countries have peasants organised and even armed themselves to protect a government which does not ignore their interests against the pressures of military coups d'dtat, townspeople's organisations, and rich landowners and their foreign allies. The best known of these countries are North Vietnam and Castro's • I t frequently takes the form of import of Food Aid which may well keep the towns happy but practically kills all productive incentive in the rural sector.

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DEVELOPMENT

Cuba. Moat other leftist leaderships have not recognised their need for rural support, and have been bent on creating an industrial sector with a working-class to back them up. Such have been the policies of Dr. Nkrumah in Ghana and, to a lesser extent, of President Nasser in the United Arab Republic. Neither have been very successful. The fact that under present conditions in underdeveloped countries industry may not progress out of step with agriculture may well have been the main hindrance to the rise of an industrial working class. In addition, leaders of such leftist governments have observed Soviet developments too superficially to realise the specific differences between what was possible in Russia forty years ago and what is possible in their countries today. In almost all underdeveloped countries these reasons have caused a situation in which the governments, being deprived of an industrial working class, of a productive middle class and of an organised labour force in the rural sector, have become political prisoners of the very rich or of their own administrative organs. As they have no popular class to give them the mass support required for effective government, they are at the mercy of the army or any other organised pressure group which is also economically unproductive. As these governments are also objectively unable to solve the economic problems of their countries, and do not have an independent source of inputs which could vitalise industry or agriculture, they become increasingly subject to recurrent changes by coups or similar political methods. Time after time widespread popular support, which is difficult to justify objectively, is given to changes in government in the illusion that change meane hope. From a political point of view, there are only two ways by which a government truly bent on economic development can pursue the necessary policies for its achievement. It can be rigidly dictatorial, as in some Communist and Fascist countries in which government is protected by rigorous methods against any kind of real or apparent opposition, so that it can implement its policies unhindered by public pressure. It is then usually hoped that when these policies bear fruit they will also create the interested organised class to support further progress in the same direction. Alternatively, it can pursue a truly democratic policy by stimulating rapid organisation of the rural masses in protection of their own interests and of the government which supports them against the less numerous but better organised strata, i.e. the civil servants, the

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military and all other non-productive groups. Whereas t h e first policy will usually kill much popular incentive and thereby defeat its own ends, the policy of democratically reorganising the socioeconomic power structure may, at least initially, involve political dangers which could render it inapplicable. Perhaps there is no solution and only time can pave the way to overcoming political constraints. Perhaps foreign aid more t h a n anything else helps t o maintain these pressures which, in some countries, prevent governments from relying on more democratic forces because it gives those in power the means of pacifying their opponents. 9 Perhaps with a better understanding of foreign aid programmes, with more goodwill on the side of the donor countries, and with less fear of illfounded accusations of neo-colonialism by corrupt cliques, and perhaps with the termination of government-to-government aid altogether, the political structure in underdeveloped countries can revert to a more realistic political power relationship, t o a situation where political power arises out of the economic contribution a given class makes to the country's common good. I n other words, wha+ is necessary is a process of real decolonisation to eliminate the legacy of the colonial powers' hegemony, through an appointed class of administrators, over the potentially constructive forces in the country.

» See Part Π .

ν INTERNATIONAL TRADE AND PRICES: THE PROSPECTS FOR TROPICAL EXPORT CROPS

So far our discussion has been mainly concerned with the supply side of agricultural production. We have taken the current rate of population growth as a given datum and have studied the technical possibility of raising per capita output of labour and per acre yield of land by a rate higher than that assumed necessary for the accretion of people. Following this we discussed the suitability of several organisational frameworks for translating the technological possibilities mentioned earlier into actual fact, and took a brief look at the cultural, institutional and political impediments which tend to hold back this transformation. We shall now turn to the demand side of the problem by examining which kinds of demand can help to turn theoretical possibilities into practical achievements. The two main sources of demand are international trade and local requirements. In both cases, we are concerned only with effective demand, i.e. demand which is backed up by purchasing power in money or exchangeable goods. We shall discuss international trade first because it is the less complicated. This is so because external demand can usually be assumed as given and backed up by the necessary exchange products, whereas internal demand must always depend upon the growth of the country's economy, including the growth of the agricultural sector. This makes the study of the latter kind of demand more involved and strongly connected with urban and industrial growth, which requires separate detailed examination. The main points at issue in external demand are the rates at which demand for individual products in underdeveloped countries can be expected to grow during the next decades, and the price variations with which this growth is likely to be accompanied.1 1

The following is the view of F.A.O. on this point as summarised from

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Taking the world as a whole, the volume of exports of agricultural produce rose during the last two decades by approximately 85%, but the average export unit value declined during the same period by approximately 15%. At the same time, the total value of both agricultural and non-agricultural world trade increased by 200%. Hence in terms of purchasing power for manufactured goods, export earnings from agricultural products have deteriorated. If export earnings from agricultural products are taken for the underdeveloped countries alone, the picture is even gloomier. Firstly, a general rise in prices reduced the purchasing power of those underdeveloped countries which export agricultural produce in terms of the manufactures they were able to buy and, even more, of their ability to pay for imports of capital goods. Secondly, the relative decline in food production as a result of the high rate of population growth in several of these countries added further to the unsatisfactory relationship between export earnings and the need to import foodstuffs at prices which were rising more sharply than those of other agricultural products.2 When studied in more detail the picture is even less satisfactory. During the last 15 years the value of world exports of food and foodstuffs increased by approximately 100% and of cereals by 120%, whereas the value of sugar exports rose by no more than the "Indicative World Plan for Agricultural Development", The Times (London), October 19, 1966. "Projected increase in net exports of Developing Countries 1962—1975. (The Optimistic View)" Million $ in per cent Net Exports 1961—1975 (decrease) —2 Rubber, Natural —1,111 Sugar 1,360 11 16 Jute find Jute Manufactures 402 18 Fats and Oils 869 19 456 Tea 22 Cotton and Cotton Manufactures 641 33 Coffee 1,761 44 505 Cocoa 45 Meat 368 100 Roundwood 198 Taking even this "optimistic" view it is hard to see how exports can really be expected to bring in the capital required to lift the economies out of their plight in the face of an annual 2.5% rate of population growth. 1 Vide F.A.O., op. tit., p. 29.

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15%, oil seed by no more than 9%, tobacco 6%, while coffee, cocoa and other typically colonial products fell by between 5 and 7%. Altogether then, the value of goods imported from underdeveloped countries, such as sugar, oil seed, tobacco, coffee, cocoa, cotton, rubber, did not rise at all or even fell. The only products originating from underdeveloped countries which increased their value in world trade above the rise in the cost of imports from developed countries, were forest products, particularly roundwood and panels. 3 For this reason, the underdeveloped countries could not even maintain the necessary equilibrium between current exports and imports, let alone pay for capital out of their export earnings. Increased production was seldom accompanied by a commensurate rise in earnings, but more often than not by so steep a fall in prices that even the higher output could not make up the difference. Taking agricultural exports region by region, it appears that their gross value in Western Europe, North America, Australia, New Zealand and Japan, taken together, rose by about 100% and in real terms by close to 60%, while the value of agricultural exports from Latin America rose by only 20%, from the Near East by 26% and from Africa by 10%. In the Far East, their value actually fell by approximately 5%. If measured in terms of real value the situation was even more disappointing because, taken together, the value of exports from the last named regions fell by close to 2% between 1951 and 1966.4 Thus, in comparison with other export unit values, the increased output of agricultural export produce in underdeveloped countries caused a fall in prices rather than a commensurate rise in earnings. During the same 15 years, average export unit value fell for sugar by 3%, tobacco 4%, coffee 30%, cocoa 45%, cotton 25%, and natural rubber 15%, all approximate. Yet while this decline took place in underdeveloped countries, the value of export crops in developed countries was rising. The value of foodstuffs increased by almost 4%, and of dairy products by upward of 3%.5 Hence, even in the unlikely assumption that further increases in output of tropical products would not incur further reductions in their prices, the increase would have to be very high indeed to make up for both the fall in export per unit prices, and » Vide Ibid., p. 30. * Vide Ibid., p. 31. 8 Vide Ibid., p. 34.

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the rise in prices of exchangeable products which to be imported from developed countries. Moreover, as production of bananas, soyabean oil, ground nut oil, coconuts, coffee, tea, cocoa, cotton, rubber etc. can often only be extended at the expense of land •which could otherwise be used for food for local consumption, the logic of an agricultural policy which allocates top priority to export earnings in underdeveloped countries seems questionable. This can also be seen from a comparison of volumes and values of agricultural imports. The volume of all agra imports in developed countries, excluding Japan, but including mutual trade between the developed countries, increased during the last 15 years by about 20%, while the agra imports of underdeveloped countries increased by more than 80% during the same period. In terms of value, again excluding Japan and including imports from other developed countries, agra imports in the latter rose by about 18% while that of the underdeveloped countries rose by close to 50%.® The difference in the balance of payments was largely made up by foreign aid and loans. To counteract the adverse effects of falling export prices of underdeveloped countries, attempts were made to reach some international agreement for their protection. A number of developed countries agreed to introduce tariff cuts on several tropical products, but only where this did not run contrary to existing preferential arrangements. Thus, the great surpluses of coffee encouraged the International Bank for Reconstruction and Development and the International Coffee Organisation to study the possibility of shifting resources away from coffee cultivation to other products. Consultations were also held concerning cocoa and sugar. In the latter case, however, the policy was rather to support minimum price maintenance and not to discourage greater production. Intergovernmental consultations on commodity exports were held in various UNCTAD bodies, but again with the aim of achieving regional agreements and supported prices rather than crop diversification. Altogether, it seems that most people concerned agreed upon the need for diversification of production in developing countries, although most actual efforts were directed towards increasing the total output of tropical goods. This, unfortunately, was also the case with crops which increasingly meet stiff competi• Vide Ibid., p. 38.

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tion from synthetic materials. It appears more and more obvious that a policy of stimulating agricultural export production cannot solve the problems of underdeveloped countries. Such a policy is, and will of necessity continue to be, accompanied by a persistent fall in the prices which farmers receive for their products; this, in turn, prevents the growth of demand for the produce of local manufacture and industry, i.e. the development of a national market. Little imagination is necessary to see that when farmers represent 60 % of the population and their incomes are falling, manufacture and industry are faced with shrinking markets; as a rule, this does not encourage productive investment I7 Although in terms of current prices farmers' receipts may have gone up here and there, this increase is illusionary; if deflated by the cost of living index, there remain few countries in the underdeveloped world where farmers' incomes have actually improved.8 For example in Assam, nominal prices received by farmers have increased during the last decade by close to 30%, but deflated by the cost of living index they fell by close to 9%. In the same decade, current prices in the Argentine fluctuated more vividly, rising by close to 80%; deflated by the cost of living index, they fell by close to 7%. Theoneoutstand 1 Vide Ibid., p. 49. Table 11-16. Indices of Prices Received by Farmers Deflated by Cost of Living Index Country 1964 1965 1966 1962 1963 (Indices, average 1969-—61 = 100) 95 95 94 86 India (Assam) 96 — Puerto Rico 104 97 96 89 92 94 103 108 — Argentina 102 101 Cyprus 109 97 — According to the Indicative World Plan for Agricultural Development ". . . the prospects in developed markets for the traditional export commodities of developing countries are very poor. The plan estimates that the value of their overall net exports should fall between 1962 and 1975 for raw cotton, jute, wool, hard fibres, rubber and possibly tea; while for coffee, cocoa, and bananas they might rise by 2.6% a year. I t is at present estimated that, even with booming economic growth, the rich countries will increase their net agricultural imports by only 1.6% a year over the next deoade (at constant prices). Even assuming that UNCTAD-type negotiations lead to changes of trade policy this could at best be pushed up to 2.6% a year in value terms, taking likely price changes into account." (Quoted from London Times report October 19, 1966). ' Among these are Taiwan and Panama.

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ing example where farmers' receipts rose during this period on all accounts was in Panama, where they increased by over 6% at both current and deflated levels. If it is remembered that almost everywhere farm incomes per head are considerably lower than incomes in other occupations, and that most people in underdeveloped countries are farmers, the constraints which export production imposes on the development of manufacture are self-evident. In view of the foregoing, it is now necessary to examine the current agricultural development policies of underdeveloped countries to see what chances they have of extricating these countries from their economic backwardness. Most current development plans in the underdeveloped countries, with the exception of North Korea,9 envisage an annual rate of growth of between 4 and 8% of the gross national product. The planned growth of agricultural production in these countries is usually lower by 2% than the planned rate of growth for the gross national product as a whole. The share of investment of the private and the public sector in agriculture differs from country to country. For example, in Argentina the total planned annual increase of gross national product is 5.9%, and of agricultural production alone only 4.2%. Yet the share of agriculture in total investment is only 17% and the share of agriculture in public investment no more than 2%. In Columbia, where the planned annual increase of the gross national product is 5.6%, and the planned annual increase of agricultural production 4%, the share of agriculture in both total investment and public investment is 12%. In Equador, where the priorities allocated in the planned annual increase of the gross national product are more favourable for agriculture, the planned growth is 6.2%, whereas the increase in agricultural production alone is supposed to be 6.6%. Accordingly, the share of agriculture in total investment is planned there to stand at 16%, while public investment is only planned to be 7%. In Uruguay, no public investment at all is envisaged for agriculture; the planned annual increase of the gross national product is 4.7% and of agricultural production 4.2%. Nevertheless, total annual investment in agriculture is planned to rise to 14%. In India, where the planned annual increase of the gross national product is 5.5% and the planned annual increase of agricultural * North Korea plans a 16.2% annual growth of her G.N.P.

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production 5.6%, the share of agriculture in total investment is planned to be 16%, and in public investment 19%. In the Republic of Korea, planned annual increase of the gross national product is 7% and of agricultural production 5%. The share of agriculture in total investment is planned at 16% and in public investment 23%. In Iraq, where the planned annual increase of the gross national product is 8% and of agricultural production 7.5%, the share of agriculture in total investment is 23"% and in public investment 26%. In the Sudan, where the planned annual increase in gross national product is 4.3% and in agriculture 4%, the share of agriculture in total investment is 21% and in public investment 27%. In Syria, where the planned annual increase of the gross national product is somewhat higher than in the Sudan at 7.2%, and the planned annual increase of agricultural production is 6.7%, the shares of agriculture in total and public investment are similar to those in the Sudan. In Madagascar, where public investment is taking a large share in agriculture, the planned annual increase of the gross national product is 5.5%, and of agriculture 5.9%. Another country where public investment takes a great share in agriculture is Tunisia, where the planned annual increase of the gross national product is 6.5% and of agricultural production 2.8%, and where the share of agriculture in total investment is 31% and in public investment 45%. From these examples it seems fairly obvious that few governments intend to invest really heavily in agricultural development, while those which do usually assign a specifically high priority to export crops. A noteworthy tendency in all countries that raised the rate of investment in agriculture recently is the increasing emphasis on the use of fertilisers. Other positive tendencies are wider recognition of the need for farmers' incentives, credit arrangements, marketing organisations and land reform. Altogether, however, most progress continues to be made in export crops and least in improving the domestic market situation. Yet it is a fact that most national development plans have somewhat improved their provisions for agriculture. The Guyana Development Plan 1966—72, allocated about 32% of all public investment to agriculture. The government of the Argentine has committed itself to giving first priority to the satisfaction of local agricultural needs. (Unfortunately, while stressing the need for giving agriculture first priority, the organisation responsible also

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indicated that agriculture should no longer emphasise the meeting of local demand, i.e. exporting only what is left over, but should rather concentrate on export production leaving for local markets what cannot be sold abroad, i.e. the traditional outlook.) In Mexico, a five-year agricultural development plan 1966—70, lays emphasis on local markets, diversification of production and self-sufficiency in food. There is no pressure for export production and surpluses are to serve for the regulation of prices. A not dissimilar policy allocating priority to production for the home market and to diversification is pursued by the government of the Dominican Republic which plans to export foodstuffs, particularly vegetables, only after they have been domestically processed and if they exceed local consumption needs. In Chile, agricultural plans are mainly concerned with increasing the cultivable area by irrigation schemes and soil conservation programmes. Brazil too, is trying to diversify production and to reduce its coffee surplus. In fact, the Brazilian government has come to an arrangement with the farmers under which the latter will uproot close to 400 million coffee trees. In Burma, the 1966/69 Development Plan allocates priority to agriculture, especially to the establishment of processing industries for raw materials. The agricultural scheme of the South Korean government in its 1967/71 Development Plan is designed to achieve independence from foreign aid and self-sufficiency in food by 1971. North Korea, which in the past has made great progress towards self-sufficiency in cereal production, is now reverting to large investment in heavy industry for military reasons. Mongolia's Development Plan 1966/70 also emphasises industrial production rather than agriculture, yet investment in mechanisation and water resources will continue to rise. In Thailand, where earlier plans resulted in a rapid growth of industry, the new 1966/70 Plan concentrates on agricultural development. The main investments will go into water resources, transport and communications, with some additional investment for improving farmers' organisational efforts and diversification of production. In India, the emphasis is on the introduction of high-yielding varieties of new seed and the expansion of rural credit. Efforts are also being made there to increase and improve water supplies. Altogether, however, Indian progress has been rather disappointing. In Ceylon, the investment programme for 1966/70 envisages major investments in agriculture aimed at achieving a good degree of import substitution through a rapid

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rise in local food production. In Syria, the five-year Development Plan 1966/70 stresses as a major objective the improvement of rural living standards. Almost 90% of all agricultural investment is earmarked for irrigation schemes, of which almost 70% for constructing the Euphrates Dam which should provide for the irrigation of more than half a million hectares of hitherto uncultivated land. In the United Arab Republic, the short-term three-year plan is heavily geared towards changing the country's crop structure to increase the value rather than volume of agricultural production. The area planted with cotton is to be reduced and the remainder planted with better strains to make up for the reduction in area. The area allocated to rice is to be increased to reduce rice imports. In addition, heavy investments are expected to be made in irrigation areas which will become fit for cultivation with the implementation of each further stage of the Aswan Dam development schemes. Israel plane to raise agricultural output by 35% and exports by 75% between 1966 and 1971. The emphasis here is on improved mechanisation; most of the finance for the development is expected to come from the agricultural sector. The various development plans in Africa, especially those of Cameroon, the Central African Republic, Chad, Dahomey, Gabon, Uganda and Zambia, are also beginning to devote more attention to agricultural development, but there is far less real effort to implement the plans in this particular sector than there is lip-service paid to the need for agricultural development. Moreover, where rural progress in Africa south of the Sahara (excluding South Africa) is most obvious, it is usually concerned with export crops. Little actual diversification of production has taken place and little progress in the development of processing industries. A more detailed assessment of the various development plans in underdeveloped countries can be found in the Γ.Α.Ο. publication, The State of Food and Agriculture in 1967, from which the above examples were summarised.10 In Bhort, it appears that the production of export crops in underdeveloped countries continues to increase more sharply than their demand. Incomes from these crops do not rise proportionately to the volume of their exports, leading to overestimation of prospective 10

Vide F.A.O., op. cit,, pp. 65—74.

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incomes in foreign currency and to gradually increased competition between the use of land for crops for export or for the satisfaction of local demand. Hence, while the value of export crops falls, the prices of locally consumed agricultural products show a tendency to rise. Most governments are bent on policies of industrialisation and are fearful of urban political unrest. They cannot permit continual rises in local food prices and consequently have to regulate them and to supplement local food supplies by imports. This not only requires more and more foreign currency, but also the kind of price maintenance which must reduce farmers' incentives to produce more for the supply of local markets. Although many governments of underdeveloped countries realise the dangers inherent in the predominance of export farming, as is shown by the repeated stress on the need for diversification of agricultural production and for import-replacing foodstuff production, there is little they can actually do about it. In a word, the demand for tropical agricultural products in the developed countries is declining and too little is done to find other sources of demand which could replace it. Demand for such commodities as coffee, sugar and cocoa is already fairly well-satisfied and further increases in their demand cannot be expected to grow by more than the rate of population accretion; indeed, the rise in demand is not only below the rate at which the supply of tropical export crops has been increasing lately, but is also lower than the rate of population accretion in underdeveloped countries. In addition, the demand for crops like rubber and sugar cane is being increasingly replaced by demand for superior products which can be produced more efficiently in the developed countries. It is almost certain that continued concentration on agricultural exports to developed countries must eventually lead to catastrophe. The only reasonable alternative lies in developing internal exchange possibilities between the agricultural and industrial sectors within the underdeveloped countries themselves. It is for this reason that a protected common market in the underdeveloped world increasingly becomes a necessity. It is also for this reason that diversification of agriculture rather than greater export production must become the main objective of modern rural planning. Finally, and perhaps as a result of this, only a policy which promotes a redistribution of incomes in favour of the majority of the population, i.e. the farmers, can raise any realistic hopes for extricating developing

9 V—93

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countries from their predicament. All that the export of tropical agricultural products can do is to help maintain a level of foreign exchange earnings to pay for current inputs; it cannot finance real economic growth. The latter can only develop out of simultaneous progress in industry and manufacture and the unhindered exchange of products between industry and agriculture. This requires protection from competition by ex-colonial markets and industries and the abstention, at least initially, from interference with the price mechanism except in years of climatic calamity. It would also require the development of regional arrangements amongst underdeveloped countries for achieving industrial economies of scale. Finally, considerable infrastructural investment for the provision of transport facilities and of an adequate power supply would be necessary. 11 So far we have examined some of the trends displayed by international trade in the agricultural products of underdeveloped countries. It may now be useful to examine the theoretical assumptions behind international trade theories in the light of the inequalities between trading partners from developed and underdeveloped oountries. Students of international trade, like all other economists, are concerned with efficiency, equity and stability. The questions they ask about efficiency usually concern the allocation of resour-

11 According to the Indicative World Plan for Agricultural Development "the only hope, if experts are to continue to provide the vital stimulus t o development, lies in the rapid expansion of trade between developing countries themselves. Two major barriers stand in the way of realising this. One is the old question of liquidity, the limited if not non-existent foreign exchange resources of developing countries available to finance their imports. How far the 'Rich' countries are yet prepared to try to solve this problem was demonstrated at the recent I.M.F. meeting. The second barrier lies in the simple lack of commercial knowledge or organised trading channels. At present these exist almost exclusively for exports from low-income to highincome countries and vice versa. Today if Senegal exports oil to Morocco, the simplest trading route from Dakar to Casablanca is via Rotterdam . . . . A recent Gatt report has demonstrated that a start has been made: Trade between developing countries increased by only 11% from 1953 to 1959, while from 1959 to 1964 it rose by 37%. But trade on the scale required t o make any effective economic impact cannot be achieved by just letting things ride. A major new clearing system is required." (Report in London Times, 19th October, 1966.)

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ces and redistribution of economic tasks among participating countries. Those they ask regarding equity usually relate to problems of redistribution of wealth inside the participating countries as a result of international trade. As for their questions with regard to stability, these normally concern the effects foreign trade may have upon economic stability, that is, whether reliance on foreign trade does not import dangerous sources of economic fluctuation which could otherwise be avoided, and to what degree international trade affects the trading countries' individual freedom of action and domestic planning. Let us begin with efficiency. It is a wellknown proposition that foreign trade from a global point of view leads to better allocation of international resources. The question which has to be raised in our specific case is whether this re-allocation of resources and tasks between the various countries of the world may not damage the weaker and poorer participants while yielding its advantages to the stronger and richer; also, whether it may not be true that because of restrictions in the movement of labour from one country or part of the world to another, the general re-allocation of resouroes is not totally free and is subject to perturbation which can adversely affect the underdeveloped countries. Furthermore, it is necessary to examine whether the relationship between supplies of natural resources and of man-made resources does not in our specific case transform the law of comparative costs in such a way that it can no longer fully apply to trade between economically more advanced and less advanced countries. The dictionary defines comparative cost or comparative advantage as "the principle that under given technological conditions the increased product obtainable from specialisation and exchange rather than from a policy of self-sufficiency and economic isolation will be maximised when each country or region specialises on the production of those goods and services in which its comparative advantage is largest, that is, its comparative cost of production is least." 12 May it not be that while the principle remains correct and provides a good reason for international specialisation, it may still require modification to allow for situations in which economies grow at different rates of acceleration or where some factors are immobile, or where there are monopolistic interferences ? 18

Everyman's

9*

Dictionary

of Economics,

p . 77.

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As such allowances have to be made, it is obvious that its theoretical and analytical justification cannot suffice for the solution of the problem at hand. Firstly, the inequality between the trading partners of developed and underdeveloped countries is too large for the regulative apparatus of exchange rates to operate effectively and be sufficiently powerful to balance the forward and backward flow of the required competitive price levels. Secondly, the quick growth of man-made resources in developed countries is so rapidly replacing most of the natural resources in which underdeveloped countries have their relative advantages that it is hardly possible to see how international trade can stimulate production in the latter. Thirdly, the long period of development in some countries and the stagnation in others has already allocated trading possibilities in such a way that, without deliberate effort to break the international division of labour, there is little hope that any of the underdeveloped countries will be able to find a place in world trade of a kind to improve its economic situation. The fact that science and technology have developed, and that capital has been concentrated in some countries to give them the advantage of being able to produce practically everything at much lower cost, except for a few tropical commodities, shows that the results of international free trade need not always be to the best advantage of all. It could make the rich countries permanently the only industrial ones, and the poor countries permanently the suppliers of small quantities of tropical products and of some raw materials. As the demand for tropical products is fairly limited and the demand for industrial products almost unlimited, the widening gap becomes obvious. The law of comparative advantage, which may have considerable benefits in exchanges between countries of more or less similar economic status, may well hold few advantages for traders of different levels of economic attainment. Hence the conclusion must be that underdeveloped countries may be much better served by the provision of a mutually protective market of their own and by excluding competition from the developed world. A common market of the poor may therefore be a much better agent of progress than an international economy. The belief that low wages, the assumed asset of underdeveloped countries, may suffice to attract industrial capital from developed countries is quite ill-founded. In earlier days when industry still relied on a great deal of unskilled labour, this assumption may have

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held a grain of truth. Of late, however, development of modern industry has moved away from this stage; employment opportunities for unskilled labour in industry have decreased, because industry concentrates rather on high capital inputs and highly skilled labour. As the educational level in most underdeveloped countries is such that a highly skilled labour force is not available, costs of production must of necessity be higher than in developed countries. Therefore, a free flow of capital will tend rather to attract more capital to the developed countries than to the underdeveloped. This naturally also applies to interest rates. It thus becomes somewhat pathetic to see how the International Monetary Fund suggests to underdeveloped countries devaluation of currencies as a stimulant for economic development. To be sure, devaluation raises the cost of imports and this may have a salutary effect on excessive consumers' expenditure, but at the same time it adversely affects the possibilities for purchasing necessary equipment and spare parts for industrial production. On the supply side, the calling-down of currencies in underdeveloped countries usually has a directly negative effect. Most of these countries cannot increase their exports in answer to the challenge of lower prices because there already is a glut on world markets of the products they export; the net result of devaluation is therefore that incomes usually fall. The main objection, however, is the effect devaluation has on the cost of spare parts for industrial equipment in view of the lack of opportunity for selling industrial products abroad, and the urgent need for national industrialisation. A policy of imposing selective tariffs would be a much more reasonable step towards restricting unnecessary consumer goods' imports as this would do less damage to efforts to produce industrial substitutes locally. In any case, devaluation of currencies of underdeveloped countries should never be recommended without careful examination of their elasticities of demand and supply. The second problem concerning international trade and price policies is that of equity. How does international trade affect national income distribution ? In most cases this depends upon the mode of production in exporting countries. Where production takes place on large latifundia the consequences are self-evident. The owners of such estates will try to sell their products at the best possible price and spend as little as possible on wages. Where population

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accretion presses hard against the available sources of employment, more and more people will seek work on the plantations and wages will consequently fall to a bare subsistence minimum. Where and when the government is able to interfere, it can introduce minimum wage levels which, under conditions of great demand for employment, may or may not be adhered to. Even if adhered to they may still be very low, because plantation owners can always prove that any wage increase forces them to ask higher prices; this makes their produce less competitive on international markets, causing earnings in foreign exchange to decrease. Alternatively, if plantation owners are permitted to pay whatever wages the workers will accept but the government imposes high taxes on profits, the position will only slightly differ. The government may then earn the necessary money to invest directly in construction or industry, and thus create alternative employment and provide the infrastructural basis for future developments. The difficulties in this case are usually found in the social and political spheres, and in the risk that capacity is created without the possibility of using it, a very costly process and dangerous not only because of depreciation and maintenance costs. It seems fairly obvious that, given the political and social conditions which prevail in most underdeveloped countries, reliance on export plantations usually leads to a negative redistribution of incomes. In countries where export crops are produced by family farmers and other smallholders, the position can be somewhat more encouraging. Incomes are then better distributed, and unless heavy taxation or other administrative interferences reduce incomes below a certain level, farmers' demand may provide the initial incentive for the creation of local industries. In most cases such industries would have to be protected from foreign competition, and this may of course bring retaliation against the country's export crops. Foreign trade will always import elements of economic instability. Fluctuations in the market demand of developed countries obviously affect the demand for products of underdeveloped nations. As capitalistic development economies have their inbuilt mechanisms of economic fluctuation, they will by their trade impose them upon the economies of underdeveloped countries, wherever these tendencies have not already developed. The wellknown interaction between the multiplier effect and the acceleration principle which, in spite of the great progress made in the use of

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fiscal and monetary correctives, still causes strong fluctuations in developed economies and tends to produce an accelerated reflection in changes in the demand for raw materials, may import grave difficulties into the economies of less-developed countries. The supply of raw materials being the main source of export income in underdeveloped countries, even small fluctuations in developed nations become magnified in the less fortunate. Here again, international economic agreements between underdeveloped and developed countries could reduce these risks considerably. Unfortunately, international relations on the political level have not yet reached this position. All this does not amount to a negation of the value of international trade for development; it merely stands as a warning against over-reliance upon this alone, against the lack of discrimination in the selection of trading items and partners. Finally, in this connection, a word on the movement of capital from developed to underdeveloped countries in the form of foreign aid. In principle, the advantages of foreign aid are fairly clear. Underdeveloped countries have land and labour, but are desperately poor in capital; the assumption can therefore be made that, given capital, economic activity will progress on an upward trend until it reaches a satisfactory level. This was indeed the experience with foreign aid in Europe after World War II where the Marshall Plan greatly assisted and speeded-up economic recovery. The Marshall Plan can therefore be taken as good evidence of the positive possibilities inherent in capital assistance for economic recovery. But that was a question of recovery and not of development. The capital supplied to Europe merely filled a gap when one factor lagged behind the others. Neither European technological knowhow nor European attitudes of maximisation had been destroyed by the war. They continued to develop, so that after the war only the capital to combine with them for effective production was absent. Once this gap was filled, once the supply of real capital was brought to an even level with education, technology and attitudes, Europe recovered rapidly and was well on its way to greater economic progress. In underdeveloped countries the situation is quite different. There too is a shortage of capital, but an increase in capital alone will not align the other factors on an even level. More likely than not, it will put capital in advance of educational and social attainments,

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adding a new source of disequilibrium and producing expensive unused capacity which has to be maintained. I n the worst case, the capital will be misused for purposes other t h a n economic development, being turned into conspicuous consumption, or being returned to its countries of origin in the economically advanced world without having a productive effect on the underdeveloped regions. Capital allocation to underdeveloped countries must therefore be judged by different criteria than the capital assistance to Europe after World War I I . Only where capital allocation can stimulate internal productive forces should it be recommended, and then in carefully calculated proportions and with good timing. I n any case, investment must always be selective. I n the past, infrastructural works and industrial efforts have dominated the minds of investment decision makers and seldom has any new capital gone into the rural sector. Gradually this tendency seems t o be changing, though not sufficiently so; where it does, unfortunately once again it goes in the wrong direction, towards stimulating export crops rather t h a n self-sufficiency. Too little foreign assistance capital has gone into agriculture, particularly into arrangements t o promote price and product stabilisation. I n acquiring agricultural equipment, insufficient selection has been made t o ensure its suitability for the elimination or reduction of bottlenecks of one sort or another. Nor has foreign aid been used t o back up the prices of agricultural products advantageous to the community's welfare. Although some governments have set up purchasing stations for agricultural products t o stimulate market production, nowhere has foreign aid been used t o back up such purchases at price levels above those economically justified by market prices. I n general, financial resources have never gone into agriculture with the deliberate intent of stimulating production of t h e developmentally most desirable crops, as distinct from those suitable for export. Too little has been done for transport and storage and for the reduction of price fluctuations between seasons. Thus t h e most important area for investment and the one which has t h e greatest chance of success and immediate returns, has become t h e most neglected. Therefore what ought to be done now for laying t h e foundations for development in some underdeveloped countries may well be: a) support for purchasing stations for agricultural products; b) selective subsidies for prices of products which a f t e r careful analysis are found to be best suited to the land on which

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they are produced and for promotion of the people's welfare from the medical and industrial points of view; c) construction of storage facilities for sufficient foodstuffs to keep prices at an even level throughout the year; d) construction of consumer goods industries based on agricultural products, but only where experience shows that they have a reasonable market. The higher incomes which arise from supported prices may well encourage farmers and give them the capital necessary to improve inputs and raise outputs. In addition, it may give them the money for purchasing locally-produced industrial goods, thus encouraging growth in other sectors of the economy. Private enterprise should be promoted to encourage farmers and manufacturers to improve efficiency. The State should provide the capital if individuals do not realise the immediate advantages they stand to gain, or if they do not have the necessary resources. Such government assistance should be directed towards the elimination of bottlenecks in the process of development rather than to anticipation of developments. It should not create capacity but follow existing trends. For example, in the early stages of a country's development, silos should be built if farmers suffer from losses through inadequate storage facilities and townspeople from price fluctuations. Similarly, government assistance should help farmers in the construction of roads. It should open industrial enterprises for goods which already have a market and which have to be imported. In all, the state's main concern should be with internal demand rather than with exports. In the terminology of the F.A.O.'s Indicative Plan for Agricultural Development, it must be an essential part of the development strategy "to build up agro-allied industries — to process farm output" in the underdeveloped countries. "Detailed study of East Africa shows that this should be the most dynamic sector of the regional economy; with a growth rate of some 7 or 8% a year it should provide a major stimulus to the expansion of agricultural output. In the fifties the establishment of heavy industries in low income countries was often considered the only route to development, but agriculture's failure to keep in step has led over and over again to failure." For this reason "the F.A.O. plan is placing the emphasis on the closely integrated expansion of agriculture and agro-allied industries — with each putting pressure on the other towards faster growth." Finally, regional studies made for F.A.O. also indicate that it should for example be possible for

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Near East countries "to supply those of East Africa with cheap fertilisers, while surplus food production in East Africa — particularly meat and maize — could go some way towards meeting the Near East's growing food deficit. This is exactly the sort of division of labour that the plan aims at spelling out", and of which the present author approves.13

18 Excerpts from F.A.O. Indicative Flan quoted above from The Times of London, October 19 1966.

VI INDUSTRY AND AGRICULTURE: A PROBLEM OF PRIORITIES

In retrospect it appears that all progress in agriculture during the last two or three centuries has been accompanied by the development of urban manufacture and industry. Although history books frequently convey the impression that industrial were always preceded by agricultural revolutions, the sequence of events need not necessarily have been so simplistic. Obviously, it is hard to see how manufacture and industry could progress before agriculture reached a stage of productive efficiency at which it could supply the extra produce for feeding people not directly employed in food production. However, good organisation, even without the introduction of better methods of cultivation and improved implements, has frequently sufficed for agriculture to provide the surplus needed for feeding 10% or more of a population which was not directly concerned with food production. There have been few periods in history during which the agricultural sector did not feed people or classes who did not engage in farming. For example, in ancient times the citizens of Rome and several other cities lived on the extra produce provided for them by farmers all around the Mediterranean or by their slaves in Italy. In the so-called Dark Ages, kings and their entourages moved through the countryside and were fed by the nobility of the regions. So did priests, barrelmakers, salt merchants, and others who in smaller or larger numbers were present in almost all eras, seldom engaging in agricultural production themselves. The same is true of the Middle Ages when farmers provided the food for vassals, seigneurs and soldiers, who deliberately set themselves apart from and above the villeins by not soiling their hands with labour. It is for this reason that, at least in the more fertile parts of the world, there usually has been an extra product which could be used for feeding people engaged in occupations other than farming.

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I t is also for this reason that the simplistic view of the necessity for an agricultural revolution to precede industrial growth cannot really be justified. It is perhaps more reasonable to say that a qualitative change in the nature of the occupations of people not directly employed in agriculture has always preceded progress in agriculture. The growth of towns may have been responsible for a more stringent exploitation of agricultural labour, that is, for better organisation of the exploitation of the countryside. However the incentive towards innovation in agriculture could only come with two processes which were essentially urban. Firstly, exchange had to develop, so that townspeople could exchange products with the countryside rather than merely exploit it. Secondly, urban production had to develop; townspeople had to begin producing with the intention of having exchangeable goods for the countryside, and had to use new skills and by-products in ways which would eventually also help farmers to improve their productivity. The relevance of the first point is obvious. As long as the town merely organised the rape of the countryside, farmers had little reason to apply themselves to raising productivity. Consequently agriculture was faced with direct disincentives. Moreover, even where such disincentives were least strong, exploitation of the farmers was still too hard to permit them to collect and store sufficient surplus to be able to invest effectively in improvement. The second point, that the towns must produce the necessary physical inputs required for raising agricultural efficiency, is less obvious but equally important. It has to be remembered that the atmosphere in town is usually less stifled by tradition and is therefore more suitable for the development and introduction of new ideas. Secondly, urban occupations are more conducive to the introduction of new equipment and the modification of traditional kinds than is usually the case with rural occupations. Thirdly, the concentration of people in towns and the better chances for individual advancement through applying one's faculties to new methods of production, further help to stimulate a sense of inquiry and thereby the progress of science. Fourthly, this concentration enables education to be provided more easily than in the country, and this is the first prerequisite for promoting scientific and technological change. Fifthly, townspeople are deprived of some basic safeguards for subsistence which farmers can usually find even in bad times; this puts specific

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pressure on them t o be on the alert for new ways and means for making a living, at least until social security can give them safety similar to t h a t enjoyed by the farmers. This may give them a much higher degree of inventiveness and capability. Finally, the development of urban production enables townspeople to produce equipment which may be indispensable for the promotion of agricultural efficiency. Better cast-iron and the steam engine developed for mining and industrial purposes, found their first application in the towns but were soon made equally applicable to agriculture. The development of industry not only produces the machinery and equipment which can help to raise agricultural productivity, but also supplies the by-products which are of little value to industry itself but of great value to agriculture. These can therefore be purchased by the rural sector at reasonably low cost and greatly enhance per acre productivity. Altogether, therefore, there is a close interdependence between the growth of agriculture and of industry without one having a necessary priority in the time sequence. At one and the same time, towns supply the materials and equipment which increase productivity in agriculture, and the demand for food and for agricultural raw materials to set industry to work. Urban workers need food and industry needs raw materials; together, these two requirements provide the market which is the ultimate stimulus for better agriculture. This has to be remembered in the formulation of any agricultural development policy. Agriculture needs inputs and a market, and neither of the two alone can suffice to change rural productivity. Sometimes planners have assumed t h a t markets can be artificially stimulated at home or found abroad even without the development of local industry. These assumptions are illusory. "Abroad", as we have seen earlier, the demand for agricultural products from tropical underdeveloped countries is limited and cannot really suffice to stimulate the rise in productivity which would make the rural sector in these countries prosperous. The unrestricted concentration of ever more people in the towns who are either employed by the government in service occupations or in construction, cannot yield immediate exchangeable products and therefore cannot suffice to stimulate agricultural production. Such concentrations can only exist on the basis of exploitation of the rural sector, and this, as shown by the examples from cities of Antiquity, cannot create the necessary incentives t o better farming.

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Only where foreign assistance helps to maintain the towns can there be a rise in agricultural production to satisfy the demand created through foreign aid. Unfortunately, foreign assistance frequently takes the form of food aid, which cannot help agricultural incentives as it is competitive, or which finds its way back to the aid-giving countries without ever affecting local economic forces. Sometimes it even takes the form of funds which are re-exported in exchange for consumer goods from the developed countries. There is therefore only one solution: the gradual growth of a local consumer goods industry which will perform the metamorphosis required for the stimulation of exchange between town and countryside. 1 Y e t the construction of such a consumer goods industry even with foreign assistance is more problematic than meets the eye. In the first place, the lack of capital and skilled labour will put any local industry at a disadvantage in comparison with foreign competitors. Only under conditions of relative monopoly, through the exclusion of foreign competitors, has such an industry a chance t o capture local markets. But the position of relative monopoly may affect the quality of production to such an extent that local customers will rather do without local products or will try to get their foreign equivalents at much higher prices on the black market. 2 Hence, only a policy designed to protect industry from outside competition while allowing as much as possible internal competition may perhaps yield the desired results. If we look at the progress of industrialisation in India, the following points may be noted. In the first place, there is a wide gap between investment in capacity and actual income from the resultant production. In other words, too much investment has gone into the creation of excess capacity and too little into output. Partly this was due to the choice of those investments which were primarily designed to create an infrastructure; this by its very nature, seldom yields immediate visible rises in output, though if done judiciously it will show results after some passage of time. But partially it was

1 As Professor Kenneth Boulding says in his poem "The Old Agricultural Lag", "Hard work and saving ä la Mill, Is seen as far too bitter a pill." Yet it may still be the only real solution. 2 The problem of quality control and prestige labels is a very important but neglected field of study by development economists.

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also due to the narrowness of the effective demand for industrial output, and this narrowness also contributed to the under-exploitation of capacity. Secondly, the administration which was to supervise the development of industry was singularly unsuitable for the job, having been originally created for a completely different purpose. It was there to administer law and order and the other duties assigned to it by colonial society. It was an administrative apparatus developed for the protection of a status quo with little scope for initiative. This organisation was now burdened with the duty of taking an active and constructive part in the country's economic development. The lack of initiative which was a desirable quality in the colonial administration was certainly not a suitable state of mind for an administration charged with fulfilment of the new purposes. Thirdly, ministerial coordination in the decisionmaking processes was lacking. There was too much centralisation and too little delegation of actual responsibility, of giving authority to the men on the spot. In fact, decision-making responsibility became the sole province of the ministers at the centre of government, whereas the local administrators of development plans were left with a bare minimum freedom of action, if any at all. Moreover, any plan which required cooperation between two or more ministries was hamstrung by lack of coordination and by the inability on both the local and central levels of government to operate in unison. Fourthly, the lack of an organised tradition of criticism from below and the inability of the people to organise an effective supervisory system, opened up too many opportunities for corruption and nepotism in the assignment of development contracts and tasks. If we add the low level of consumers' demand and the high concentration on infrastructure, the reasons for the ineffectiveness of government policies to stimulate industrial growth seem to be fairly obvious. Thus, although industrial investment in India rose from 5% of the national income in 1951 to 11% in 1961, this made no real impression on living standards. The annual rate of growth, deflated by a 2% per annum increase in population, stood at 1.5% per capita, and this was not a result really commensurate with the great efforts made by the State towards industrialisation. Despite all the priority allocated to it in India, industrial progress was considerably less impressive than in China where no specific priority was given to industry over agriculture during the greater

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p a r t of the same period. This criticism of Indian industrial progress does not exclude recognition of the fact t h a t some specific achievements were quite outstanding. The production of diesel engines increased by close to 1000%, of electric motors by 300%, and of steel by more t h a n 250. Even more impressive may be the fact t h a t production of consumer goods increased during the same period by close to 100%. Yet measured by the effort made, even these individual success stories may not be as good as they appear. They have to be deflated by the rate of population growth and studied in relation to their statistical points of departure. If one electric motor is produced a year and another one is added, the increase is hundred per cent; if a hundred are produced annually the addition of one will show a statistical increase of only one per cent. Hence the most encouraging sign appears to be the general increase in t h e production of consumer goods, t h a t is, the increase in production in those industries in which the government made the least effort. I t is of course true t h a t some of the government's infrastructural investments may have enabled this increase in the production of consumer goods in the sector not directly dominated by government; again, however, careful analysis shows t h a t the share of the infrastructure in this increase may not be as impressive as it ought t o have been. More likely t h a n not, the stimulus given t o consumer goods industries was brought about by the demand created by t h e employment of workers in the government sector rather t h a n by the results of this employment, from a directly productive point of view. To quote a most outstanding member of India's Planning Commission, Dr. D.R. Gadgil, 3 there was probably very general agreement among qualified observers t h a t since independence India has shown an increase in corruption, especially among the highest and most powerful strata in society. This was so because, while in t h e colonial period, the "national anti-colonial leadership had recognised t h e necessity to raise the country from its depressed social, educational, political and economic state, a fact which gave it the prestige and moral ascendency which enabled it to lead and be followed by the people at large and t o be both critical of the people and yet enthused many of them t o work for the advancement of their

3

D.R. Gadgil, Planning and Economic Policy in India (Poona, 1962).

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country against heavy odds and at the risk of incurring the wrath of the foreign rulers, the coming of independence changed this situation very profoundly. The peaceful change-over from colonial rule to independence affected on the administrative level the political post alone. Thus to be sure the one-time political outcasts and detainees became and justly so the occupants of the offices vacated by the British while the rest of the administration remained unchanged. Yet even in the political offices the changes of rulers did not bring about any changes in the manifestation of authority." In effect, so says D.R. Gadgil, "the new leadership very rapidly adopted all the outward mamiers of the foreign rulers which were intended to keep them apart from and above the people they were ruling . . . The whole administration continued to impose the colonial structure which united the characteristics of a caste society with that of a class. Consequently the interests of the superior service personnel in the civil services whose members continued to be carefully selected by the old colonial criteria had a very great influence in all national policy decisions. As in colonial times the government continued to attach more importance to the good standing and prestige of its officials than to telling the truth to their public. Consequently, all public arrangements became a kind of privilege sphere of government officials who need pay little attention if any to the requirements, demands or criticisms of the people." In other words, the country's development projects and investments became a Garden of Eden for all who hoped to go unpunished in putting their hands in the till. And so it happened that although the administration had grown and widespread welfare programmes were initiated, the machinery for implementation remained unsuited for achieving these objectives. Together with this, the rise of the new group of protected capitalists, "those new captains of India's industry", as D.R. Gadgil calls them, "appears to be another questionable social phenomenon. In colonial times, there was a considerable gulf separating businessmen from civil servants. This gulf has disappeared. As the new leadership has failed in creating new social values the civil service became increasingly influenced by the business community." Thus civil servants under the new conditions were always looking over their shoulder to see whether they could not find openings for themselves or their children in 10 V—93

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the new class of industrialists. As the development-dominated policies of the government gave priority to industry, most success in private business depended upon the goodwill of government administrators. The results of the strong wish of civil servants to maintain good relations with industrialists seem fairly obvious. Consequently private business interests impressed their narrow needs upon government officials who dealt with the implementation and sometimes even the planning of state investment. Planning decisions were increasingly subjected to the wishes of a small class of private businessmen who were out to enrich themselves rather than to fulfil the needs of the people as represented by their government. This in itself would not have been so disastrous from the point of view of economic growth if these businessmen were really engaged in industrial production. However, the truth was, and still is, that they are predominantly engaged in finance and commerce and that their whole organisation is still strongly influenced by the old colonial structures. To be sure, they cannot be compared to their capitalist brothers in 19th century Europe or North America. To quote D.R. Gadgil again, "the Indian businessman happens at present to be at a particularly unattractive stage of his development. He was never noted for any highly puritanic or moral qualities. He has also not been imbued with that high sense of social and national responsibility which characterised the Japanese businessmen in the Meiji era. However, some generations ago he was at least frugal and unostentatious. Recently he has shed those characteristics and is now rapidly adopting the consumption standards of European and American businessmen . . . The high consumption standards of owners and managers of modern business constitute a first charge and expense accounts, air-conditioned restaurants and hotels and nightclubs, figure as essential lubricants in the progress of Indian industrialisation." In short, the policy of centralised industrialisation appears to have a number of social and administrative drawbacks which by themselves may render it less than effective. However, there are also weighty economic reasons for doubting its applicability. There is no point in repeating the whole argument showing that a low level of national income cannot stimulate consumer goods industries. The idea that the creation of a good infrastructure by direct state

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investments can rapidly reduce production costs in industry to so low a level that real incomes will sufficiently stimulate demand, has never been proven beyond all reasonable doubt. 4 The worst fact about heavy investment in underexploited infrastructure is its high cost of initial investment and rising costs of depreciation and maintenance. Thus, each new investment which within a reasonably short time does not contribute to higher production, inflates the demand on savings or on foreign aid with no other advantage than its maintenance. There is thus a persistent drain on savings or aid created by such investment which is not accompanied by an equal growth in production. In time, the mere need for savings to maintain infrastructural investments before they can be 'exploited becomes so costly that too little is left for construction of consumer goods or other industries to be able to exploit the advantages the infrastructure can give. For example, while the construction of hydro-electric power-stations can greatly reduce industrial production costs and be advantageous to various sectors of the economy, these sectors will only benefit if they can find the money to set up the necessary plants. If maintenance and depreciation costs are so high that nothing is left for dependent industries, it would be better not to rush into construction of the power-station in the first place. The idea that provision of power may attract foreign savings because of the cheaper production costs, is also illusory. Other requirements in addition to the power supply must be fulfilled if industrial production is to be really competitive. No industry today can be internationally competitive without a growing degree of vertical and horizontal integration. Unless it can effect economies of scale in acquiring materials and in marketing arrangements in some of the pre- and post-production stages, it will find international competition too severe for it to be able to survive. An industry which cannot count on ancillary trades to provide it quickly and easily with whatever repair parts or by-products it may require cannot hope to compete on present-day world markets. Few industries can go without customers for their by-products or wastes, or without a skilled labour force.

1 Vide Y.S. Brenner, Theories of Economic ter on Soviet Theories.

10*

Development

and Growth, Chap-

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DEVELOPMENT

Technology has developed so much in recent years that unless the available labour force has a level of education and responsibility far beyond that attained in most underdeveloped countries, no industry can make use of the modern machinery which alone can give it that margin of productive advantage to make it competitive. The period has passed in which industry could employ unskilled labour for repetitive manual jobs and could set the speed of performance by regulating the conveyor belts. All such jobs are now performed by mechanical equipment; the little human labour that is necessary requires qualities particularly suited for the supervision of highly complex machines. A high level of education permitting the handling of sophisticated equipment must be combined with a tradition of responsibility and workmanship; unfortunately such qualities are rare in underdeveloped countries. These observations may be illustrated by the fact that most of the underdeveloped countries which produce natural oil have seldom managed to develop their own petro-chemical industries, although this would be much more profitable than mere oil extraction. The reason is that it requires not only heavy capital input, which some of them may have, but also a variety of skills and ancillary industries without which a petro-chemical industry cannot successfully develop. The only way by which to achieve industrialisation in underdeveloped countries is apparently that of patient growth, starting from the bottom with consumers' demand, stimulating investment in consumer goods industries which must stimulate the production and better supply of equipment; this will then be assisted by government investment in infrastructural inputs. Thus, the government should only engage in the construction of a hydro-electric plant, for example, when there is sufficient evidence that it will be economically utilised after completion. In other words, the government should invest in infrastructure where its absence is an obvious restraint on growth; it should not provide an infrastructure in anticipation of demand, in the mere hope that its very existence will act as the deus ex machina to call forth initiatives for its exploitation. Finally, the government should always bear in mind that without demand industrial production cannot grow; for this reason, careful attention should be paid to equity, to the better distribution of wealth. The mixture of planned and free enterprise economy which seems to be desirable for the development of underdeveloped

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countries today must always be based on this balance between equity and efficiency. On top of this, governments should use their political independence where necessary to protect their sectors of production from foreign competition, and to encourage trade and communication with other countries of a similar level of development.

PART TWO

THE USE AND ABUSE OF FOREIGN AID (Thoughts about Ghana)

VII INTRODUCTION

A. SOME BASIC FACTS ABOUT GHANA

When Ghana became independent she was a predominately agricultural country with a very narrow industrial basis and a vast service sector; a relatively large number of literates were employed in foreign business firms and in the civil service. Approximately 62% of the working population were engaged in farming, 24% in commerce and other services, and only 14% in manufacturing, mining and construction. More than half her Gross Domestic Product came from agriculture, the rest being shared almost equally by the other two sectors. Since independence there has been a small increase of people employed in services, particularly in teaching and administration, and a somewhat greater increase in people engaged in construction. The main source of income continued to be agriculture, with cocoa contributing the major share. Efforts to build up an industrial sector did not meet with much success. While the population of Ghana increased at a rate of about 2.5% per annum, growth of employment in manufacturing and construction remained at less than 0.1% and 0.3% respectively. Much of the increased employment in construction went into supplementing the country's infrastructure. However, only one in three of the workers employed in manufacture and one in two in construction are wage-workers in the accepted sense of the term. The rest are home-makers engaged in traditional trades such as home-brewing and weaving.192% of the 1

T h e 1962 Industrial Census mentions no less than 92,095 manufacturing establishments with 251,175 employees of whom only 61,529 were paid wages while the rest were recorded as "other persons engaged". In construction the ratio of paid to "other persons engaged" was somewhat better; out of 78,074 only 15,701 belonged to the latter category. In this context, home-makers are understood as people who occupy themselves with some manufacturing in their own homes.

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manufacturing establishments do not employ paid employees, 7% employ between one and five, and only 1% employ more than six. I n construction, 19% employ between one and five paid employees and 81% more t h a n six. Altogether, wage workers in manufacture and construction total less t h a n 150,000 out of close on 330,000 workers. Other people directly concerned with production, excluding farmers, total approximately 50,000 most of whom are engaged in mining and lumbering. Here, too, the proportion of wage-workers is about one in two. This fact t h a t no more than perhaps 14% of the country's total working population, or less t h a n half her non-agricultural labour force, is directly concerned with production, has far-reaching economic and political implications, as has the fact t h a t half these workers do not receive cash wages. 2 Both objective and subjective factors prevent the growth of Ghanaian industry. Ghana is not particularly well-endowed with internationally-scarce industrial raw materials, and lacks both the capital and technology required for successful competition with developed countries. For this reason, she has to rely for effective demand either on equally underdeveloped countries in Africa, which may be able to exclude Ghana's competitors from their markets, or upon rapidly increasing domestic consumption, or both. The first alternative implies African or regional unity, the second greater equity in the distribution of the national income and more exports of primary products to developed countries. The first alternative is reminiscent of Japan's path of economic growth during the late 19th-early 20th century when ehe directed a great share of the industrial product to the Chinese mainland; the majority of people there were very poor indeed, but their numbers were sufficiently large to present an attractive market for the then relatively small Japanese industry. The second alternative calls to mind the economic progress of North America in the 19th century, when abundance of land, high wages and the rapid accretion of population combined t o set domestic demand on a rising trend. Massive highly-concentrated foreign assistance has been suggested as a third method for overcoming Ghana's marketing problems. Theoretically, of course, the development can be envisaged of a highly capitalised industry producing an exportable product and * This point, which is crucial for the formulation of any development policy, will be discussed later.

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using an intermediate technology for which labour is available. 3 Such an industry in fact exists in Ghana. The Obuasi gold mines are highly capital-intensive and have been so since the 19th century. However, this is an extractive industry dependent on what may well be the only important natural deposits to be found in really interesting quantities in t h e country. Moreover, gold like manganese, bauxite, beryllium and diamonds which are mined in Ghana in relatively small quantities, does not happen to be particularly suitable for spreading production to secondary and tertiary industries. Indeed, even oil, which may or may not be discovered in commercial quantities near Keta or Anloga, and which holds considerable possibilities for ramification, cannot really be expected t o solve the basic problems of industrialisation in West Africa. The amount of capital which can be realistically expected from the developed countries, the number of adequately educated workers or potential workers and the total of auxiliary industries, will long be insufficient to balance the vast economies of production experienced by petrochemical industries in developed countries. I t is for this reason t h a t massive and concentrated foreign aid can make a commensurably significant contribution only in conjunction with one or both of the earlier mentioned political alternatives. Only an African or regional agreement excluding competitive goods of foreign origin, and clearing the ground for economies of scale and a far more equitable distribution of national incomes, can successfully nurse African industries into viable existence. This point cannot be overstressed. Too often development is confused with favourable balances of foreign trade or payments. One need only think of some of the oil-producing countries to note the difference. Even assuming t h a t exportable raw materials in commercial quantities were discovered in the near future in Ghana and that the required capital for exploitation became available, this would not necessarily promote the country's economic development. Only if the socio-political structure encourages reinvestment in profitable enterprises and makes higher disposable income available for s Something of this nature happened in a number of Russian industries around the turn of the century. However, requirements of industry then and today are fundamentally different. Then, mechanisation replaced ski'ls, i.e. it required a lower level of ability than that offered by the traditional manufacturers; today, the position is reversed and highly developed industry requires the highest possible level of education and ability.

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an increasing part of the population, can money earned from the exportation of raw materials really stimulate development. Unfortunately, governments do not operate in a political vacuum and it is a sad fact that those governments which can best rely on their exports of raw materials are least capable of pursuing the forementioned internal economic policies. To be sure, exportation of primary products can show a favourable balance of payments; but while a prolonged unfavourable balance is normally the symptom of economic difficulties, a favourable one does not necessarily record real improvement when measured by actual or even deferred higher living standards for the majority of a country's population. In an underdeveloped country, an export boom in primary materials may well benefit a certain section of the population without affecting the economy as a whole. In a predominantly self-sufficient economy there is no automatic mechanism, no powerful multiplier effect, turning the earnings of one group of people into additional income for others. There is, however, a mechanism which stimulates the re-exportation of additional earnings to the developed countries. 4 How, then, can social and political conditions in Ghana become more amenable to national development?

B. AGRICULTURE

Ghana is a predominantly agricultural country with a population of over 7,500,000 and a labour force of about 2,700,000. More than three-quarters of her people live in rural habitations and less than one-quarter in localities with more than 5,000 inhabitants. 5 Close to 60% of her labour force is engaged in agriculture; 1,000,000 (62%) of them in field crops and foodstuffs, and 600,000 (38%) in cocoa and similar export crops. Together with forestry, lumbering and fishing, agriculture contributes over half the country's Gross Domestic Product, and cocoa alone accounts for seventy per cent of all exports. During the last two decades the population of Ghana has increased by approximately 2.5 per cent per annum, and there 4

It just is not true that "what is good for General Motors is good for the American people". 6 Only 8% of the population live in towns of over 100,000 inhabitants.

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seems no apparent reason why this trend should not continue. Neither the number of people employed in agriculture, nor productivity, has risen correspondingly.® Consequently, consumption of local food has diminished relatively while imports rose. As the average Ghanaian spends about 60% of his income on food, drink and tobacco, the gap has become quite formidable. 7 With cocoa prices much lower than they used to be and with little prospect for a dramatic recovery in the immediate future, it is difficult to see how conditions can improve without considerable progress in agriculture. In fact, unless some as yet unknown exportable minerals are discovered, Ghana will require an annual growth rate in agricultural production of about 3 % % to keep pace with population growth and migration. 8 Can this actually be achieved, and is there any other alternative ? Ghana covers an area of about 92,100 square miles of relatively poor soil. The North is typical savannah land where there is nothing to protect humus from rain and sun and even the top soil is very poor. In the Southern forest region the situation is better, the humus being protected by the overgrowth by which it is produced. As a result, the land can only be exploited to a limited degree in both regions and is constantly threatened by exhaustion. Ghanaian farmers have therefore developed a specific method of cultivation which is consistent with their lack of capital and relative abundance of land. This method, commonly known as shifting or rotative cultivation, consists of the simple expedient of using only a small portion of the available land at a time and leaving the rest fallow until it regains the degree of fertility which makes it worth cultivating. The length of the time which has to elapse before land once used can be profitably re-exploited differs from place to place and from crop to crop. On the whole, it would not be a bad estimate to say that no more than ten or eleven per cent of the total area of Ghana is cultivated at one time. 9

'Productivity now stands at 1 : i y 2 in Ghana and 1 : 12 in the USA. 7 In rural areas, the average consumption of self-produced products is about 31%, in towns it is only 7%. • The ambitious Seven-Year Development Plan stipulated an annual rate of 61/2% of economic growth. •Total area cultivated is approximately 6,872,277 acres out of 58,944,000 acres.

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In the Northwest and Northeast of the country, population pressure is very severe. The land is cultivated continuously; the people keep cattle which provide them with some manure, but even so the yields are very poor indeed. Further south, and throughout most of the savannah, the population is very thinly spread and most of the land is left fallow for very long periods. In fact, farmers reoccupy land at about ten-year intervals. In the south itself, i.e. in the forest zone, shifting or rotative cultivation is broken by tree crops, the most important of which are cocoa, plantains, oil palms and lime. Here too, the land which is not planted is only intermittently exploited, although at shorter intervals. Partly this is due to the humus, but also to the high population accretion and the encroachment of tree crops upon land which would otherwise have been available for food crops. In fact, out of the estimated 10% of the country's total cultivated area no less than 6% is planted with cocoa. 10 In the north, yam is the staple food. Other crops include millet, groundnuts, guinea corn, and in smaller quantities, maize, rice and tomatoes. Cattle is kept in the north for meat and for brideprice. In most of the south the land is not suitable for yams and the staple food is cassava. However, the main crop is cocoa, and as young cocoa trees require plantains and cocoyams for their protection, these are also grown in some abundance. In smaller quantities the forest region supplies bananas, citrus fruit, coffee, copra, maize, oil palm, rice and tobacco. Farms are relatively small and seldom consolidated. In the western region, a holding averages about 11 acres, divided between three farms. In the north, the average holding is smaller, about seven acres, but individual farms are fewer and therefore larger. In the central, eastern and Volta regions the average holding is between three and five acres and the average farm 1% acres. In Ashanti and Brong-Ahafo, both holdings and farms are somewhat larger; approximately eight acres per holding and three to four acres per farm. Obviously, the size of the farms is not suitable for the use of labour-saving mechanical equipment. Another problem which makes the mechanisation of agriculture very difficult, particularly in the more fertile south, is the high rate 10 2,648,000 acres are planted with food crops and 4,224,277 acres with cocoa.

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of population growth. Over vast areas, Ghanaian farmers are now exploiting their land more frequently than a decade ago. The length of fallow is becoming shorter, and yields per acre consequently decrease. As an equilibrium between the increased total output from the more frequently exploited land and the lower per unit yields per acre is drawing closer, underemployment of labour is mounting and mechanical equipment is progressively rendered uneconomical. In fact, many farmers who no more than ten years ago divided their land into seven portions and exploited only one part at a time, now find it necessary to divide their land into only four portions in order to find employment for their greater families, although they are well aware that the additional output is only marginal. Obviously, productivity of farm labour is very low indeed; perhaps 15 or 20% of what is common in the highly developed countries. This is hardly surprising. The estimated value of rural capital in 1960 was no more than £G 17 million, that is 1.5% of the country's total capital in that year. The actual figure increased in the following years but the percentage remained unchanged.11 In sum, then, there is ample capacity in Ghanaian agriculture for increasing both per acre and per capita output if the necessary capital becomes available. Too often, however, the consequences of the absence of such capital and of a strong and organised cash demand for farm produce is confused with farmers' lack of initiative and drive. As a matter of fact, Ghanaian farmers, particularly in the forest belt, have a very keen eye for profitability. They know for what their soil is suitable and make rational use of labour. They are also familiar with the inadequacies of market and transport facilities. Although here and there farmers will plant trees for prestige value, this will never exceed what they can actually afford. As a rule they do what under their specific conditions is most reasonable and economical. They use large inputs of land and labour

11 Birmingham, Neustadt and Omaboe, A Study of Contemporary Ghana (London, 1966), Vol. I, p. 203. The total capital of £G 1,164 million was divided over the following categories: General equipment 16%, Vehicles 2.6%, Construction 48.7%, Cocoa 31%, Other rural 1.5%, Aircraft & Ships 0.3%. The total number of tractors in 1963 was 1522, but it is unlikely that more than half of them were operational. Most of the work was, and still is, done by the hoe, cutlass, axe, spade, pruning knife and sometimes in the north also by bullocks.

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to make up for the shortage of capital, and grow crops for which there is a reasonably effective demand. They even have the foresight to plant trees which will not yield any income until six, seven or eight years later. When the Ghanaian farmer plants cocoa, he knows that he can plant no more than 200 to 250 trees per acre. He further knows that he can expect an income of about one Cedi12 per tree after the trees reach maturity. He will therefore never plant so many trees that he is left with too little land to supply him with the food he requires. In other words, he is always aware of his opportunity costs. There is even a fairly high degree of labour mobility in Ghana as a result of income differentials. Labour flows from the north, where a day's labour is worth six shillings (three shillings in food and three shillings cash) to the south, where a day's labour is worth seven shillings (three shillings food and four shillings cash); and there is a considerable movement of labour back and forth between farming and townwork, a movement which is directly related to wage rates and food prices. Therefore, the real question which requires an answer is how the farmer can get the capital to improve the productivity of his land labour, and whether a market can be found and a marketing system developed to take up the resultant extra product.

C. EDUCATION

From her colonial era, Ghana inherited an educational system which was good in comparison with other colonial systems. There were several good secondary schools,13 and even a University College which had a special relationship with the University of London. The early products of this University College, which later became the University of Ghana, were a group of able and well-educated Ghanaians. The system as a whole, however, had little to commend it. It was dominated by Victorian attitudes and strongly influenced by the missionaries who held sway over most of the secondary schools. The system was very useful in producing low-grade civil servants and clerks, but did little to promote independent thought 12

In 1965, Ghana's currency was decimalised. The Cedi, which became the basic unit, was equivalent to 8s.4d. la Schools at which pupils study for Ο and A level examinations.

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and technical education. It was useful for the colonial administration and for private trading companies because it enabled them to employ Africans in clerical jobs at a considerably lower cost than Europeans. Its main merit, from an African national point of view, was that it spread literacy and provided the administrative personnel which was able to take over from the colonial government when the country achieved independence. Its main disadvantage was that it produced a state of mind and a value system which was inimical to economic development. The main attraction of education was that it gave the educated man an opportunity to get an office job; this not only enhanced his prestige but also provided him with an income above that which he could earn by working the land. Sometimes, particularly in the civil service, it also provided him with the chance of doing things for other members of his extended family. For this reason, the family usually viewed with favour the education of any of its members. However, as employment opportunities for the educated were restricted to the civil service and a small number of expatriate firms, students developed a clear bias in favour of the humanities and law to the exclusion of all other subjects. Education was increasingly reduced to the training of low level office personnel, while the ability to read and write English established a claim to white-collar employment and high wages. Before long, the literates developed a kind of class-consciousness which set them apart and above the rest of their people. This "white-collar hegemony" had deep roots in the colonial reality of the country and was never really challenged by other classes, least of all by the productively engaged majority. White-collar jobs had always been the best paid as they were reserved for Englishmen and those Africans who imitated the English way of life. Moreover, in the otherwise rather rigid African social structure, the more or less equal opportunity for advancement through education and employment in the civil service prevented the most able of the younger generation from feeling frustrated with the social system. Thus, Ghanaian society not only accepted but actually approved of the white-collar hegemony, and a wage structure developed which put a premium on office employment. Even junior administrative office-workers can count on an initial salary of 20s. per day whereas a fully qualified locomotive driver, a tug master, or a riveters' foreman cannot expect a salary of more than 12s.2d. a day, not to mention qualified 11 V—93

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mechanics whose daily income cannot exceed 15s.14 No wonder, therefore, t h a t young Ghanaians preferred to study humanities rather than technical skills, and t h a t the education system helped to drain both agriculture and other sectors of the economy of its most ambitious and able manpower. Perhaps not surprisingly, things worsened after independence. I n the first place, the literates took over political power from the withdrawing colonialists; in the second place, the newly promoted Ghanaian heads of departments were less able than their foreign predecessors t o resist social pressure to create additional clerical employment for members of their clans. I n fact, they were bound t o do so by social convention because they had to repay their families and villages in one way or another for having nursed them through the education system t o t h e positions of power and affluence they now held. Thus, by enlarging the number of people in administrative government employment, the advent of independence mitigated the social pressures brought to life by the lopsided educational system. Obviously, this helped to prevent a backward flow of educated Ghanaians t o agriculture and other non-clerical employment. I n addition, this trend was stimulated by the fact t h a t industry could offer no competitive openings, and t h a t a combination of colonial autocracy and traditional authoritarianism created an atmosphere which hardly favoured workers' efforts to organise in defence of their interests. The colonial method of appointing rather than electing officials prevents the development of a leadership with feelings of responsibility toward the people it represents, while the traditional duty of obedience to the elders prevents t h e workers from rebelling against these arrangements. The resultant lack of real workers' leadership, together with the growing number of employment seekers, make it impossible for Ghanaian labour t o forcefully back up demands for better wages. Consequently, nonagricultural earnings approximate agricultural incomes, making t h e m unattractive to those seeking office employment. Once again, low wages render the introduction of labour-saving equipment un-

14 The wage data are taken from the schedule of Daily Rates of Pay in accordance with Article 10 of the collective agreement dated 20. 10. 1960; this remained in force until 1967 when all rates were slightly upgraded t o adjust to the much more rapidly rising cost of living index. The definition of Junior Staff is "those earning less than £800 per annum".

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economic, and the absence of sophisticated equipment makes the employment of better educated workers unnecessary. In theory, this situation might have turned the educated back to farming, but not in practice, and for good reasons. Firstly, since the Government is starving agriculture of capital there is little the educated can do on the farm. Secondly, as the Government continues to inflate the ranks of its service personnel there is no objective reason for them to return to farming. Thirdly, as education creates a cultural gap, it becomes increasingly difficult for the young to return to traditional village life. And, finally, the social security that the extended family system affords its members makes it far less urgent for rural people to react to the pressures of unemployment than would be the case in European society. Under these circumstances, education not only deprives the directly productive sectors of the Ghanaian economy of the most energetic manpower, but also creates a very difficult political situation. How can the Government pay for its inflated whitecollar personnel ? By depleting its reserves and by receiving foreign aid. In other words, by making its stability dependent upon the goodwill of other countries.

D. THE POLITICAL POWER STRUCTURE

Neither the administrative machinery nor the basic social structure was immediately changed by the withdrawal of the British from Ghana. What did change was the political leadership at the top of the administration. Yet, while colonial leadership was relatively free of pressure from below, i.e. from the Ghanaian people, the new "independent" leadership soon became the prisoner of its administrative organs. In the absence of another equally well-organised pressure group and of any tradition of organising political pressure from below on a national or even regional level, the civil service, army and police remained almost the sole factors in Ghanaian politics which could effectively force the Government to further their collective interests. Hence, in spite of a good deal of lip-service to socialism and development, government became increasingly "of, by and for" the civil servants and other educated people in its employ. The only others who had to be pacified by the government were, and still are, the people of Accra whose concentration 11«

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and proximity to the centre of administration makes them potentially dangerous. With no industry and little chance of creating directly productive employment for the Accrans, Dr. Nkrumah, whether by design or under pressure of circumstances, engaged many in construction, particularly of an infrastructure which was only too often ill-planned and in excess of the country's immediate requirements and economic ability to exploit profitably. This need to pacify the urban population not only further depleted the country's reserves and increased her dependence on foreign assistance, but also forced upon the Government a very harmful agricultural policy: on the one hand, starving the rural sector of capital; on the other, doing as much as possible to keep the prices of farm produce down. Thus, while demand for labour, which was at least in part artificially created, attracted an increasing number of workers to the town, and while the natural accretion of population in the country as a whole forced farmers to make use of increasingly poorer land, the Government was neither willing nor able to invest money in raising agricultural productivity. To be sure, Dr. Nkrumah made an attempt to solve this problem. He tried with the help of Russian, American, Israeli and other experts to industrialise agricultural production, but he left the execution of the scheme in the hands of his administrators who were neither competent nor interested in running it efficiently and profitably. Thus, while from 1954 to 1960 the country experienced a period of relative price stability, with an average annual increase of about 3%, prices rose in 1962 by 10% (this coincided with the introduction of import control) and continued to rise by close on 5% in the years that followed. Yet farmers were not allowed to reap the advantages of higher food prices. Inflation and more taxes deprived them of higher money incomes, and lack of capital prevented them from increasing their marketable output. Finally, the influx of cheap and free foodstuffs from the Western World which followed the downfall of Dr. Nkrumah's government, robbed the Ghanaian farmer of the chance to improve his economic position when depleted foreign reserves restricted the importation of foodstuffs. No-one who visited Ghana in 1965 could ignore the stimulus that soaring maize prices gave to local maize production. No-one who visited Ghana in 1966 could fail to be impressed by the rapid pace at which the farmers reverted to cassava and subsistence farming when, under the impact of Foreign Aid cereal supplies, prices fell below

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production costs. Whether or not, the National Liberation Council 15 was aware of the economic consequences of inviting this kind of foreign assistance is irrelevant, because within the given political power structure it was left with no alternative. It was this interrelated combination of high prices and an exhausted treasury, i.e. the inability to import foodstuffs and to create more not-directlyproductive employment, which united the educated with the urban masses and brought down Dr. Nkrumah's government. Once again, the farmers became the victims of their inability to organise politically against the civil service and the town in defence of their economic interests. The establishment of a private army alongside the regular forces, the spark which actually set off the powder keg that blew Dr. Nkrumah out of office, may well have resulted from his increasing recognition of the limitations imposed by the country's political power structure upon the execution of any real development policies. While he claimed to be a Marxian materialist, Dr. Nkrumah's methods for solving internal political problems were surprisingly idealistic. His attempts to reform the educated £lite by restructuring the University of Ghana in Legon and by adding the University College of Cape Coast were, in view of the economic structure of the country, surprisingly naive for a man of his political ability. So was his unrealistic attempt to create a loyal Socialist leadership at the Winneba Ideological Institute for prospective party functionaries. Even his attempt to escape the pressures of the established elite by dictatorial methods were singularly unrealistic. As Head of State he held sway over the almost sole source of employment for the educated, and therefore, had considerable economic power over the individual members of this class. As a class, however, they were more powerful than he. He could bribe some and intimidate others, but he dare not redisti'ibute the national income in a way which would be even temporarily to their collective disadvantage although this was and still is necessary to get the country out of its economic predicament. This gave rise to a peculiar ideological development. While claiming to be guided by principles of dialectical materialism, Dr. Nkrumah's party rapidly substituted purely propagandistic efforts for material incentives. The people were called upon to exert " T h e National Liberation Council was the military Junta which took over the Government of Ghana after Dr. Nkrumah's overthrow.

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themselves for no immediate material gains but rather for such abstract things as the glory of Ghana and of socialism. The approach was not entirely unfamiliar in West Africa: after all, this was what mission schools had been trying to do for a long time, although with a different object of veneration. However, a number of other factors made this policy even marginally ineffective. Firstly, the idea of God is much more personal and has much deeper roots in African society than nationalism and socialism. Secondly, Ghana as a national entity is rather new and still far from replacing the traditional familial and tribal loyalties; it is therefore hardly suitable for raising much enthusiasm of a constructive quality. Thirdly, socialism is the historic product of the exploitation of an urban working-class in the process of industrialisation. Its history created its ethos, which is part of the culture pattern within which it developed. Its transplantation is therefore meaningless unless the objective conditions have ripened. Thus, without attempting here to answer the fundamental question whether or not it is really possible to substitute ideology, propaganda and future promises for direct economic incentives in the pursuance of long-term constructive aims, it is a fact that in the case of Ghana the attempt failed. People saw it as no more than lip service, as indeed it proved to be. University students were exhorted in the name of Ghana's future to study science, but no adequate arrangements were made to create or find for them employment in their fields of study, nor was the salary structure corrected to encourage students to take science subjects, which they usually considered to be more difficult than the arts. Similarly, workers were prevented in the name of socialism from pressing wage claims, although white-collar salaries were periodically reviewed and party officials made public display of their growing wealthy This attempt to substitute idealistic motivation for material advantage is even more surprising when it is remembered that, since the great cocoa boom destroyed much of the coherence of her traditional way of life, Ghana has been paesing through a particularly unpleasant materialistic stage of development. The educational system was also damaged by the apparently progressive policies. The idea that the spreading of literacy is a developmental agent in itself is widely believed by many people, and commended itself well to a government whose leaders had al-

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all been teachers in the past. However, the possibility of using the spreading educational system to promote politically desirable views was irresistible. The temptation was so great t h a t the experience of the mission schools was completely ignored, namely, t h a t in years of dedicated work they had managed to do no more t h a n spread the outward form of Christianity without really infusing Christian values into Ghanaian ways of life and thought. I n great haste and with little consideration for details, the Government set out to introduce universal schooling. I n doing so, it ignored economic considerations, political consequences and the absence of sufficient competent teachers. Until this time, the teaching profession had been held in very high esteem in Ghana. Teachers helped to shape the ideologies and provided the leadership which led Ghana to independence. I n order to become a teacher, a man or woman had to work very hard and achieve academic success. This was recognised by the people and gave the teachers a unique position in their communities. As a result, they developed a high level of responsibility and a code of behaviour which was one of the most valuable progressive assets of Ghanaian society. However, this potential advantage, which the teaching profession could have p u t at the disposal of the government for implementing socioeconomic policies at the village level, was thrown overboard in favour of the ill-phased literacy campaign. To accelerate the supply of teachers, entrance requirements for Universities and Training Colleges were progressively lowered; and t o reduce the financial burden, teachers' real incomes were progressively reduced.1® Within a surprisingly short period, t h e profession lost many of its best and most experienced members and much of its earlier prestige. The code of behaviour relaxed and irresponsibility and corruption became widespread. 17 Before long, the profession had lost its ability to serve as a link between government and the people in t h e villages, and was no longer a useful vehicle for promoting socio-economic development policies. I n higher education things were no better. Political appointments and peculiar machinations in organisations such as UNESCO moBt

" In fact, salaries were not increased sufficiently to compensate the rising cost of living, and so fell below the incomes of other civil servants. 17 From 1965 onwards, the Ghanaian dailies admonished the teachers not to misuse their position to seduce female students, not to steal 'book money', and not to absent themselves from their schools without good reason.

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rapidly deprived Ghanaian institutions of higher learning of their previous academic standards and social value. Political appointments, particularly at the top, not only discouraged Ghanaian staff from exerting themselves to gain promotion (achievement being no longer the criterion), but put at the head of an increasing number of departments, faculties and institutions, persons who were neither academically nor personally suited for such posts. UNESCO and other institutions created wage differentials which caused ill-feelings among the staff and introduced a new type of teacher. In many cases this was detrimental to the atmosphere and to social behaviour. All this, together with the overcrowded universities, caused standards of civilised conduct to decline, so that graduates could no longer be expected to play a positive role in shaping Ghanaian society. If some do, the credit is due to the good traditions of some of the tribes rather than to institutions of higher learning. Education in Ghana thus became a means for the material advancement of individuals rather than a tool for national development. The diploma, not the subject, became the object of all learning.18 Instead of producing an economic asset, namely a literate population able to cope with the technological requirements of a new era, the new system of education merely inflated the urban white-collar proletariat and caused a relative reduction in the productively occupied labour force.

E. T H E SOCIAL CLIMATE

Yet other forces tended, and still tend, to inflate the camp of the unemployed urban proletariat, one of them being the traditional social system. The basic social unit in Ghanaian society is the extended family which, on the one hand, gives its members a degree of social and economic security, and on the other, demands obedience and material contributions. In the villages, if land is abundant, u

One result of this state of affairs is the students' increasing concentration on theory. For example, at Cape Coast University where the present author taught for several years, students taking applied mathematics were less than 10% of those taking pure mathematics. Some graduates with B. Sc. degrees were unable to repair an electric fuse or a small defect in their motor cars.

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this is no problem. All able members of the extended family will work the land and share the produce. If land is scarce, they are still obliged to work although there is less produce to share. However, if land is too scarce to provide full employment for all, everyone will work less and for fewer hours, i.e. underemployment or disguised unemployment begins. Therefore, underemployment should never be confused with unemployment or even with partial unemployment. The former describes employment with low productivity which is common in tribal rural societies; the latter refers to a situation in which workers and resources cannot find profitable utilisation at all, which is characteristic of industrial urban societies. Underemployment of labour is the product of one social system, unemployment of another. In Ghana underemployment predominantly germinates inefficiency in agriculture, and nepotism and retardation in manufacture and civil administration. In the North where land is abundant but poor, all members of the family work very hard to obtain a living from the land. In the forest region the situation frequently differs. Part of the land may be primary forest or planted for tree-crops, thus needing far less productive work. Alternative employment in either industry or manufacture or a greater demand for labour-intensive cash crops would probably cause disguised unemployment to decline. However, there is no alternative employment and no attractive market for foodstuffs ; with each child that survives into adulthood, underemployment therefore increases. For some decades now, members of the underemployed labour force have found their way to the towns either as unskilled labourers or as additional candidates for white-collar employment. From time to time, the former will return to their homes in the villages to help with seasonal work. The others have to await their opportunity, helped to survive by the collective efforts of their extended families in the villages. If they are fortunate enough to find work, they will be expected to send money home to their villages. Before long, both unskilled labourers and whitecollar workers who manage to find urban employment will discover that the financial demands made by members of their extended families become unbearable. To the families in the villages, city incomes appear so high that they cannot believe that their "brothers" in town should be unable to give them the greater part of their earnings. Similarly, the fact that one of their brothers holds an

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official position suggests that he should be able to find employment for other members of the family. Thus, the only way left to the urbanised Ghanaian who wishes to improve himself economically is to break with his family, but this the average Ghanaian finds very difficult to do. No-one, in Ghana or anywhere else, finds it easy to divorce himself from his background; in a society where almost all chances of improvement are in some way connected with tribal or familial protectionism, this is virtually impossible. This is also the reason why so many able Ghanaians seek their fortunes abroad and do not return to their homeland. Those who remain feel an obligation to their "brothers", and underemployment thus spreads from the villages to the towns where jobs are created artificially, filled and over-filled. Similarly, the social system prevents the accumulation of capital. Those who earn enough to be able to save fear that their savings will be taken from them by their families; they prefer to live ostentatiously and increase their social prestige rather than save their money. Unfortunately, ostentatious living implies the purchase of foreign goods such as Gordons Gin and Mercedes cars. Again, symbols take the place of real facts. Just as the educational system substitutes the diploma for actual knowledge, ostentatious spending substitutes for real wealth. The same applies to Government spending. More often than not, the Ghanaian government constructed factories or other state enterprises against the counsel of its economic advisors, merely to create a semblance of development or to suit some abstract idea. This is one though not the only reason, why so many well-equipped State enterprises set up in Ghana since independence have persistently made losses. With no-one interested in studying their profitability, they first became mere showpieces and then sources of increasing underemployment. State farms operated at a loss,1® while factories were established in places unsuitable for their purpose and without due regard for the availability of sufficient raw materials and power. To the uninitiated, this state of affairs, together with the deliberate opposition by official administrative circles to any kind of cost accounting and profitability studies, was " For example, one state farm fattened cattle for meat to full weight in one-third the time required by the traditional cattle growers, but at seven times their cost. On another state farm watermelons and cassava were grown at approximately nine times the normal cost.

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passed off as part of an overall development plan in which the losses of individual enterprises were compensated many times over by their contribution to the general scheme. The concept of planning also underwent a peculiar metamorphosis from a rational instrument of economic development into a thin disguise for the inefficient utilisation of major national assets and their exploitation for private gain by corrupt civil servants and ruling party officials contrary to the national interest. 20 I t is hardly surprising t h a t State enterprises had far too many administrators and far too little labour efficiency; t h a t with good equipment they produced inferior goods; and t h a t they nowhere inspired the labour force with a sense of responsibility or pride in their achievements. Moreover, many employees held their posts thanks t o family connections or outright bribery and were therefore almost immune to dismissal for inefficiency. All this, together with the poor labour traditions inherited from the colonial period, created an atmosphere which can best be summarised by the local expression, "Government money no-one's money". Obviously, this is not a suitable climate for the successful implementation of centralised economic plans. Finally, inefficiency and large-scale corruption were inadvertently promoted by Dr. N t r u m a h ' s ill-fated political system. The coming of independence was accompanied by a widespread belief t h a t now the British were gone, things were bound t o improve. The anti-colonial propaganda campaign which preceded the British withdrawal from t h e Gold Coast was in fact designed t o foster this idea. I n reality, however, Ghana was long unable to justify these high hopes. Some civil servants were promoted and a few ministerial or similar posts found for a number of party officials, but for the people as a whole there was little the new government could immediately do. As everywhere else, economic improvement in Ghana is connected with a process of industrialisation which requires a massive concentration of capital and manpower. B u t in this specific context, such a massive concentration of capital can only be achieved at the cost of reduced consumption, i.e. through " For example, when the manager of a state farm explained to the Head of the State Farm Corporation that certain crops were wasteful, he was rudely interrupted: "We know, and we have a plan and you do what we tell you and stop bothering us with your profit and loss accounts." There was no overall plan, but a powerful private motive for producing the uneconomical crop to which the farm manager objected.

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AID

at least a temporary fall in living standards; while concentration of manpower cannot be achieved without destroying traditional social structures, i.e. the partial or total abolition of customary economic safeguards. Consequently, Dr. Nkrumah's government was from the very beginning faced with a difficult dilemma. It had to reconcile popular expectations of direct economic improvement with the harsh requirements of long-term economic development planning. Within the given educational situation, this meant a choice between dictatorship and opening the doors to opportunists' bids for power. Probably influenced by Stalin's example, Nkrumah did not hesitate to choose the first alternative. Very soon, legitimate demands for improvement were regarded as national disloyalty, and complaints against individual government officials as opposition to the government as such. With no tradition of opposing authority to fall back on, Ghanaian society became less and less able to resist the transgressions of individual officials. With no free press to voice complaints against members of the government apparatus, and no effective and independent courts of law, a rule of intimidation and arbitrariness set in which left the civil service and party administration in a unique position. By 1965, bribery, nepotism, favouritism and the misappropriation of public funds had become so widespread that it rendered the implementation of government economic policy directives almost totally ineffective.21 It is always difficult to enforce law and to prevent corruption in a society in which tribal loyalties and extended family connections predominate, but the deliberate discouragement of public criticism and the liberty given to public servants to shroud all sorts of official contracts and agreements in a mantle of State secrecy, produced even more fertile ground for the abuse of power. Indeed, next to falling cocoa prices, corruption must be named as the most powerful factor which contributed to the failure of Dr. Nkrumah's economic policies. Altogether, disillusion, intimidation, corruption and, for the great majority of people, falling living standards, produced a climate of opinion which made the public welcome change from whatever direction. ! l There is ample evidence to illustrate this in the report of the W. Abrams Commission, still in Dr. Nkrumah's time, and in the great volume of Evidence given before the various Commissions which were set up by the N.Li.C. after the fall of Dr. Nkrumah's government to probe into the assets of Government and party officials.

VIII FOREIGN CAPITAL AND LAISSEZ-FAIRE

A. NATIONAL POLICY AND FOREIGN INVESTMENTS

The military junta which ousted Dr. Nkrumah from office and constituted itself as the new Government of Ghana under the name "National Liberation Council", inherited all the objective and subjective difficulties which had faced the previous regime. In addition, the new rulers had to cope with an acute food shortage, an empty Treasury, depleted reserves of foreign exchange and an enormous foreign debt. To escape all these immediate problems and to return the country on to the path of economic progress, the National Liberation Council entered almost immediately into negotiations with creditor countries regarding the rescheduling of dates for repayment of Ghana's foreign debts and regarding support for cocoa prices. In this it was fairly successful. On the internal front, the N.L.C. attempted far less successfully to reduce government spending and to clear the atmosphere of corruption which had clouded the former administration. A number of probes and inquiries were conducted into the maladministration of public institutions and into the assets of former government and party officials; these were given widespread publicity, but did not really deter others from further misuse of office. Instead of promoting a new spirit in the conduct of public affairs, they caused disbelief in the competence of Ghanaians ever to be able to run their affairs honestly and efficiently. Unfortunately, this spirit of objectively unjustified defeatism did not pass over the members of the National Liberation Council. This must be the reason why some of them at least thought that alienation of national assets might solve some of their economic problems. The purchase by foreigners of state enterprises and state farms, it was hoped, would not only replenish the country's exhausted Treasury, bring in foreign capital and maintain a good level of employment, but would also increase efficiency as foreign owners would be free of the social pres-

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sures of Ghanaian society. Moreover, pursuit of profit rather than prestige would automatically bring about the selection of economically viable enterprises and discourage any wastage of resources. In addition, as the capitalist is forced to keep a keen eye on world markets, the new laissez-faire would restore to Ghana her favourable balance of international payments. Obviously, unopposed success of such policies would put Ghana right back to where she was under colonial rule, but fortunately they are not unopposed. 1 What are the main objections ? Firstly, the adoption of such policies would deprive the country of what little hope there is of industrialisation. Secondly, living standards would be reduced even further. Thirdly, the gap between rich and poor would be widened. Fourthly, Ghana would be politically involved in the international power struggle, with rich Ghanaians and foreign investors seeking the protection of the Western Bloc and the poor being encouraged by China, Russia and Cuba to change the mode of government by violent means. Ghana's industrialisation hopes would be shattered because, in pursuing financial gain, capitalists are bound to seek the route of least resistance. As the country lacks both the necessary materials and the technology for producing industrial goods at competitive prices, increased production would be restricted to the supply of raw materials and similar colonial exports. Living standards would fall because Ghana has no monopoly over the exportable raw materials. In this age of world communications, no country can expect to have technological advantages (for production of raw materials) for any considerable length of time, and Ghana therefore has little chance of maintaining any exceptional profit rate on her exports. Labour is the only factor of production whose cost can be reduced to maintain competitive prices and still make production attractive for the investor. Hence, an export-oriented economic policy can only be successfully pursued if wages are kept at a bare minimum. This would widen the gap between rich and poor because such a policy cannot even palliate the effects of Ghana's high rate of population growth and falling per capita output in agriculture. With no deliberate efforts made to increase the productivity of farming land (no money for fertilisers etc.), the length of time 1

A good example of the existence of this opposition can be seen in t h e Legon Observer.

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during which land may be left fallow to regain fertility must become progressively shorter and yields per unit of labour input consequently smaller. Furthermore, cocoa farmers, who now constitute Ghana's vast and relatively comfortably-off middle-class, would be forced to reduce their area of cocoa plantation in order to have sufficient land to provide food for their growing families. As their income from cocoa at current prices can only serve as a cash addition and not as a substitute for subsistence crops, they may sooner or later be forced to concentrate on foodstuffs alone.2 However, as local or foreign capitalists would rather invest in cocoa plantation than in industrial establishments of doubtful profitability, the net result in the face of a strictly limited growth of world cocoa demand 3 would be merely a substitution of "farmers' cocoa" by "plantation owners' cocoa", i.e. the impoverishment of farmers and enrichment of capitalists. Finally, the introduction of capitalist methods of production in those sectors of the economy where they are most likely will do very little to ameliorate the ill-effects of population growth on unemployment. However, the most frightening consequences of an exportoriented economic policy would be in the sphere of internal developments. The Government, faced with rising unemployment and falling living standards, would become increasingly dependent on foreign assistance in the form of cash and of cheap or free food supplies to feed the large service sector and other townspeople, and to bribe or to create artificial employment for the unemployed. As Ghana has no industry, this combination of cheap food and cash can hardly be expected to stimulate economic progress although it may discourage local food production. Sooner or later, the farmers will realise their progressive impoverishment and start organised resistance. As foreign aid can never suffice the growing demands of an entire population, the government will resort to increasingly harsher measures against the malcontents. In due course, its stability will be threatened and foreign capitalist allies will be needed to rally to its support. Thus, economic grievances and foreign support for a government which is unable to solve its problems ' One acre of successfully grown cocoa can yield an income of between 200 and 300 New Cedis per annum. One acre planted with cassava or yam yields about 3 tons. 3 Professor L. J. Zimmerman has very ably shown the strict limitations of the growth of world demand for African raw materials.

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will give rise to the wellknown combination of economic and nationalist motivations which produce the most suitable conditions for Communist-led violent movements * The idea that the Ghanaian Government might escape this gloomy predicament by directly investing in sectors of the economy in which private capital, whether foreign or local, is either unwilling or unable to do so, is totally illusory. In fact, it is based on an entire series of wrong assumptions, not only that Government income from taxation etc. can be significantly increased (particularly unlikely if private investment funds are to be attracted), but also that foreign aid can ever be sufficient to cover all the following costs: (a) of an increasing number of people employed in enterprises which do not yield immediate returns and which may or may not be organised efficiently. (Private investors, particularly in Africa, are most likely to expect the Government to invest in enterprises which are not immediately profitable, and there is no reason to believe that State enterprises under a new government will be run any more efficiently than under Dr. Nkrumah); (b) of satisfying the rising demand of the military and civil administration. (As "Man's wants are infinite", and this class holds the political power to distribute funds subject only to social pressure and political expedience, which under the circumstances are conducive to nepotism and ostentation, there is little chance of much foreign aid being allocated to productive investments); (c) of capital equipment for State enterprises if aid is given in the form of real capital rather than cash deposits. And (d) of food imports to narrow the gap between population growth and diminishing returns from land, or for land improvement schemes which may or may not be carried out. In fact, the combination of private and state capital investment, with or without foreign assistance, was tried on occasion by Dr. Nkrumah's Government and failed.® 1 The Abbot affair has already shown the real nature of foreign will for industrial investment in Ghana, while the controversy about alienation of land shows how far the above mentioned trend has already gone. (Vide Legon Observer, Ghana, 2nd Feb. & 16th Feb. 1968.) ® Vide Ghana's Seven-Year Development Plan.

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B. A I D A N D STRINGS

Under the given circumstances, the only way in which foreign assistance could play a truly developmental role would be if it were given in very large amounts, mostly in the form of real capital (not cash deposits) and for definite projects selected and perhaps even administered by independent experts.8 However, such foreign aid "with strings attached" is agreeable to neither the receiving nor the donating Government. In the receiving country it is unacceptable because it neither directly enriches the ruling class nor satisfies its members' nepotistic needs.7 The leaders know that powerful factors in the donor countries, such as international political considerations, big business interests and ill-informed liberal public opinion, can be exploited to cause aid to be given in a form more amenable to their class's narrow but pressing needs; there is no reason why they should be content with anything else. All they need do to rally innocent liberal and not-so-innocent big business and Foreign Ministry opinions behind their demands, is to raise a hueand-cry about "foreign interference in domestic affairs". The Ministry of Foreign Affairs of the donor country will claim that it is impossible to defend a policy clearly designed to help the people of another independent country over and perhaps against the wishes of its own government. No Cabinet would approve of allocating public funds for development in a way which may damage rather than improve relationships with the other country's government. In addition, the bureaucracy in charge of administering foreign aid in the donor country will be reluctant to mar its public image and the personal prospects of its members, or to lay itself open to criticism at home and abroad merely to serve "a cause without glory". Finally, the political leadership will resent having to choose between political expediency and simple honesty. It would find it very hard indeed to deprive its electorate of the comforting illusion that by giving financial assistance to the governments of underdeveloped countries they are helping the poorest of the earth, • "Independent" of political and social pressures by the receiver or donor country. ' T h e term "class" stands here for all those in government employ in non-directly productive occupations (civil servants, soldiers, policemen, eto.)

12 V-flS

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and even harder to resist the pressures of well-established big business interests. There is thus a subtle link between powerful forces in the donating and receiving countries which prevents the aid from becoming a vital instrument of national development. In the transaction of giving and receiving aid, narrow class and social strata interests are deliberately identified with and presented to the public as broad national interests, although the two may more often be contradictory rather than complementary. Such linguistic metamorphosis is now so widespread that any sort of direct aid, or direction of investment, in the interests of the people as distinct from the ruling group is labelled "Colonialist" or "Patronising". As a result, instead of serving the purpose to which the taxpayers agreed, foreign aid is becoming the mainstay of an unholy alliance between the most paternalistic and reactionary governments in some developed nations and the most selfish and unproductive sections of the population in underdeveloped countries. Most government-togovernment aid has in fact long ceased to play a developmental role and has become almost everywhere an instrument in the political competition between great powers.8

C. T H E MILITARY

Another illusion which from time to time gains a good deal of illinformed support, is that "strong men", preferably army officers or a military junta, can do better than civilian governments. The supporters of this idea assume that military rulers are not subject to the social and political pressures which hinder civilian governments; moreover, being accustomed to giving orders and seeing them carried out, they will be more successful in formulating and implementing development policies. Apart from the inherent contempt it implies for people's intelligence and right to be masters of their own decisions, this assumption is factually wrong. Firstly, military rulers, no less than civilians, are the product of their society and therefore subject to the same tribal, family and class pressures. Secondly, civilian governments usually represent a coalition of interests; their 8

Even from this point of view it is bad polities, because eventually the people (peasants and workers) will rise, win their revolutions, and hardly forget who supported whom.

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leaders therefore have more freedom to manoeuvre if their policies happennot to be in the immediate interests even of their most powerful group of supporters. Civilian rulers have even been known to defeat very strong pressure groups by combining all other forces against them. Military rulers are deprived of this freedom, their position being entirely dependent upon the loyalty of the army, more precisely upon that of their subalterns in the officers' corps. Under civilian rule, powerful pressure groups can only protect their interests by paying the political price, i.e. by making concessions to other groups or classes in their society. Under these circumstances, the removal of the Head of State will accomplish nothing in the long run, because the actual power structure cannot be altered. Sooner or later the full price for the protection of sectarian interests will have to be paid.9 This is not so with military rulers. As soon as the established class or pressure group becomes dissatisfied with their policies or requires a scapegoat to appease popular discontent, it can always find another army officer to stage a coup d'6iat. Thus, for a few promotions or perhaps an increase in army pay, the Establishment (in the case of Ghana, the civil service, traders, moneylenders and representatives of foreign interests) can continue to rule the country for its own advantage almost indefinitely, or at least until there is no money available with which to pay the army. Hence, while a military government can free the Establishment from the need to pay the political price for the pursuit of egoistic policies, its leaders can do no more than maintain the status quo. It is indeed pathetic to see how many truly patriotic and honest young army officers in West Africa have been deluded in recent years into believing that by staging a coup d'etat they can serve their country well. 10 They never realise the true weakness of their position or that real progressive change can only be promoted if supported by directly interested organised forces. Thirdly, military forces in West Africa are not suited to serve the cause of the people because the armies were never designed or • The height of the political or economic price will depend on the strength, organisation, and political ability of the leaders of the other interested parties. 10

This does not mean t h a t m a n y coups were not staged b y pure careerists

with feelings of national responsibility; neither does it mean t h a t some coupe did not do a t least some good b y removing particularly obnoxious regimes.

12«

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THE USB A N D A B U S E OP FOREIGN AID

restructured to do so. Their origins were strictly colonial and they were designed and the men recruited for the purpose of supporting their foreign rulers against other foreigners11 and against the indigenous population — that is, against their own people.12 Perhaps intuitively, the best sons of West African society were never attracted to serve in such an army, whose members received little regard from the elders. Save for the substitution of African for European top officers, independence made little difference to the nature and structure of the army. It continues to be dominated by the old colonial mentality and by the same kind of training and recruitment. Far from utilising military service to promote national unity, literacy and common educational values, and to strengthen the political position of the productive classes that they may help a patriotic army command to effectively resist the selfish designs of the administrative and commercial oligarchy, military leadership continues to base its glory and distinction upon the parade-ground accomplishments of its soldiers. Indeed, no self-respecting officer of the colonial school would consider replacing his mercenaries by conscripts for fear that their appearance be too unprofessional to satisfy the scrutinising eyes of his Sandhurst superiors. After all, "Sandhurst counts", certainly as far as promotion and the esteem of other West African officers of the same school and mentality are concerned. Having had little or no experience in command in really testing battles13 and only the colonial contingents from which to learn, even such outstanding soldiers as the late Kotoka were incapable of visualising Ghana's army in any but its existing form. The reasons why the colonial regime opposed compulsory military service are fairly obvious. The reasons why Ghana's military government should desist from training its population in the use of firearms, should deprive itself of the oppoitunity to reduce tribal divisions by mingling young people of various tribes in its ranks, and should refrain from turning the army partially into an educational organisation which could devote some of its time to military matters

11

This was particularly true during World War I. "Tribal loyalties were also taken into consideration, tribesmen of one area being used to restore law and order in regions other than their own. 11 West African soldiers took part in World War I I but mostly on service and guard duties. The West African contingents which took part in the Congo U.N. force also participated in some engagements.

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and the rest to learning or teaching or some other constructive occupation, cannot be simply attributed to ignorance, shortage of funds, or resistance by the ruling establishment. Too many highranking West African army officers are familiar with the structure and methods of the Israeli, Swiss, North Viet-Namese and similar forces not to be aware of their advantages. The true cause lies in the military leadership's complete inability to free itself of the colonial image of the duties and structure of an army. Thus, with no external enemies threatening the country and with no need to defend the foreign rulers against the indigenous population, the army has lost its whole raison d'ötre in its persisting form and structure. A t the best, it merely retains some value as popular entertainment, for parades etc.; at the worst, it serves as the political police force of the ruling clique. In either case, it hardly justifies the high hopes for economic progress shown by supporters of military rather than civilian rule. Altogether, then, the assumed strength of military government and its ability to resist interested pressure groups is totally illusory, while under the circumstances, its tendency to monopolise the use of fire-arms is dangerously reactionary.

D. T H E P O L I C Y OF LOW W A G E S

Y e t another widely-held illusion is that economic progress in an underdeveloped country can be stimulated by removing restraints on profits and by keeping wages to a bare minimum. This idea, with or without the injection of foreign aid and other modifications, has appeared in many guises since the days of the Mercantilists; it rests upon the basic assumption that accumulation of capital must always and everywhere lead to developmentally-productive investment. The theoretical equipment behind this transubstantiation by a deus ex machina of profits into developmental investment, is usually some misconstrued version of Keynes' income determination theory. The argument runs more or less as follows: Savings must always be equal to investment because savings are equal to the national income less consumption. 14 However, as additional investment μ S = Y — C and I = Y — C. Hence S = I Where S stands for savings, I for investment, C for consumption, and Y for national income.

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THE USB A N D A B U S E OF FOREIGN AID 15

(foreign aid) is expected to raise national income by a multiple of the original addition (the multiplier effect), 18 and as future investment is a function of the difference between this year's and the previous year's national income multiplied by the capital output ratio (the acceleration principle),17 the ultimate outcome of the injection of foreign aid via the interaction of the Multiplier and the Accelerator, will be a cumulative upward movement of all determinants. 18 What often remains unsaid is: firstly, that the Multiplier rests upon the assumption that consumption rises and falls in unison with income but by less than the full change in the latter — the difference being saved. Secondly, that the Accelerator rests upon the assumption that a normal ratio exists between the stock of real capital and the level of national income. Thirdly, that because according to the Multiplier the level of income depends upon the level of investment, and according to the Accelerator the level of investment depends upon the rate of change in income, it is not a necessary conclusion that investment more than the rate of change in income is the strategic sector for economic development at all times and in all places. It is sufficient to remember the combination of starvation and population growth, the high income-elasticity of the demand for food, and the absence of net capital formation in several aid-receiving underdeveloped countries to realise that consumption need not invariably rise by less than the full amount of change in income, and that there need not be a normal ratio between the stock of real capital and the level of national income. Even without reiterating the usual objections to the latter assumption, which are based upon the time factor and the role of expectations, it is sufficient to remember that in a free enterprise economy the essential consideration that affects investment is profitability, and that therefore the actual capital-output ratio depends upon the rate of return on capital. Considering the state of technology, the absence of an active class 15 M

ΔΙ The Multiplier =

1

Jor

X

t =

Y

ts

,

1—c Where o' stands for marginal propensity to consume and s' for propensity to save. 17 I t = « (Y t — Y t _ t ) Where α stands for Capital/Output Ratio and t for year t, and t—1 for year t—1. _ α D 18 Yt = Yt—ι Where D stands for negative saving. α— s α—β

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of entrepreneurs and, with the exception of commerce and banking, the low rate of returns on investment (in almost all underdeveloped countries), none of the expected stock adjustments need take place. This also applies to state-managed economies where the capital-output ratio is made to depend upon theoretical and political considerations and where a good deal of unused (underemployed) capacity is therefore created. Thus, a combination of extreme (often degenerating) poverty, underemployment, absence of entrepreneurial experience, low returns on capital, and a high propensity to whisk savings off to foreign bank accounts and to consume foreign goods, is unlikely to make application of the well-known depression models which are based upon the assumptions mentioned above, into an infallible instrument for promoting economic growth in underdeveloped countries. How does this compare with reality in Ghana ? Since the beginning of the century, the population of the Gold Coast and Ghana has increased, on average, by 2.5% annually. Until fairly recently, this accretion of population was accompanied by an even more impressive rise in production. Again on average, per capita output rose by approximately 1.8% annually during the first half of the present century. Taken together, the annual 1.8% in per capita output and the 2.5% in population accretion, is no mean achievement. I n fact, it made Ghana one of the richest countries in Africa with a per capita income twice t h a t of Nigeria and well above t h a t of Egypt. The agricultural sector contributed most to this success, not only keeping pace with population growth in the country as a whole, but compensating for the diminished rural labour force which resulted from the high rate of migration to the towns, and producing a marketable surplus for export. Despite the development of minerals and the great efforts made to promoteother export commodities, agricultural products, predominantly cocoa, still contribute more t h a n three-quarters of domestic exports. Lately, however, things have begun to look less promising. I n 1963 it was realised t h a t unless agricultural productivity could be raised by upwards of 4 % a year, Ghanaian farming could not keep up with the demand for food, especially as the farming population is expanding rather more slowly than the population of the country as a whole, and also meet the necessarily growing requirements for agricultural raw materials. 19 19

Vide Ghana Seven-Year

Development Plan, 1963—1970, p. 54.

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THE U S E A N D A B U S E OF FOREIGN AID

However, although agriculture contributed above 50% to the G.D.P., and more than 75% of all domestic exports, the share of capital invested in it remained very small — about 1.5% of the country's total. 20 Consequently, productivity did not improve and perhaps even deteriorated. In fact, with the given farming techniques and capital, land utilisation is rapidly approaching the limits of profitable exploitation in an increasing number of regions of Ghana. Since 1955 local food prices have risen more sharply than those of other products, food imports have increased, and periods of fallow in many parts of the country have diminished.21 Another symptom of this "Malthusian" predicament is that farmers grow more cassava or similar high-quantity and low-quality crops. Consumption patterns have not appreciably changed and the share of industrial products in total exports has not increased; it must be therefore assumed that unless the infrastructure constructed in Dr. Nkrumah's time suddenly begins to pay off, which is unlikely, sooner or later one of two things is bound to happen. Either falling living standards will turn the tide of population growth, or the net accretion of population will become directly related to the amounts of foreign aid entering the country. In both cases, savings may increase the rate of starvation but hardly promote the growth of a national industry.22 With little hope that Ghanaian manufacturing industries can break into world markets as equal competitors, it is obvious that progressive impoverishment of the country's farming population must diminish rather than stimulate private investment in manufacture and industry. A century ago, James Steuart observed that "every person who is hungry will make a demand, but every such demand will not be answered . . . The demander must have an equivalent to give . .". 20 In 1962 domestic food production accounted for £G181 million, onethird of the G.D.P., and agriculture for £G86 million-worth of exports. The estimated rural capital employed in the same year was less than £G19 million, of which about 60% in construction and 30% in cocoa. 21 Vide Birmingham, Neustadt & Omaboe, A Study of Contemporary Ghana (George Allen & Unwin Ltd., London 1966) Vol. I. pp. 222, 277. 22 Although Malthus qualified his statement about the rate of population accretion, and although he definitely underrated man's ability to master food production problems with the help of chemistry, botany, etc., his ideas as generalities regarding countries which do not make use of capital and science in the service of agriculture arid cannot purchase foodstuffs abroad, still stand.

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With over 60% of the population becoming progressively poorer and some additional 20% having little to spare beyond their bare necessities, can there be a sufficiently large "equivalent to give" to make investment in manufacturing industries attractive? On the whole the answer must be negative. Thus the government remains the only possible investor. Only government can invest without recourse to the immediate strength of the pull of consumers' demand because, unlike private investors, it may operate at a loss. This indeed happened in Ghana. In 1960, the Ghanaian capitaloutput ratio (a) was 2.9, i.e. similar to that of the United States and Japan only a few years earlier. By 1966 it had risen further in spite of falling cocoa prices, etc. The higher ratio partly took the form of unproductive construction, but most of it proved to be unexploitable capacity, reflected in the rising rate of underemployment. Although aware of this, the government was still unable to reduce the capital-output ratio by more production. The weakness of effective consumers' demand on the one hand, and the combination of ideological commitment to rapidly widen the nation's infrastructure and the immediate political pressure to create employment on the other hand, totally frustrated most attempts towards any such readjustment. The volume of government investment in Ghana is, as everywhere else, confined to the income from a) budget surpluses, b) domestic borrowing, c) reserves, d) foreign loans and e) grants. Insofar as budget surpluses were concerned, the position was generally favourable until close to the mid-1950s. From then on, government-operated social services expanded at a rate which surpassed the growth of revenue. Soon the government was spending more than it could balance, and no surpluses were left to serve as investment funds. As for domestic borrowing, Ghana shared the common experience of most countries in the early stages of development, namely, that the mobilisation of resources by the government is achieved at the expense of reduced private investment. Instead of securing the augmentation of available savings, government policy merely effected a diversion of savings from private to public users. The damage done in this way to the economy was manifold. Investable funds were transferred from people who, given a policy which encouraged investment when in the public interest and discouraged it when not, might have used them judiciously, and put into the hands of government officials who were neither

186

THE USB A N D A B U S E OF FOREIGN AID

able nor willing t o do so. I n fact, responsibility for the utilisation of national savings was given t o people who were perhaps the least imaginative but the most subjected to social and cultural corruptive pressures of Ghanaian society. I n these hands, augmentation of Ghana's infrastructure upon which the greater part of the savings was spent, became a drag on the economy instead of an asset. Private consumption was reduced and other investments in intermediate level manufacturing industries became even less attractive and viable t h a n they already were. The policy created a selfsustained rising demand for further investment in enterprises which were not directly productive, and growing maintenance and depreciation costs. I t required even greater investments in allied enterprises t o facilitate exploitation of the capacity created by the first; and was in any case constructed at far too high a cost due to the corrupt practices of the people who were made responsible for it. The utilisation of reserves is obviously dependent upon their availability. Initially, Ghana was in a very favourable position; however, overspending rapidly depicted accumulated reserves which reached a dangerous low by the early 1960s. Since then they have continued to fall and can no longer be regarded as a source of new investment. Foreign loans have to be repaid and are therefore little other t h a n future savings. If invested wisely, of course, they will raise t h e country's earning capacity in a way which will make repayment easier even if interest has to be added to the total debt. For this reason Russia, when supplying some Ghanaian State farms with heavy agricultural equipment, agreed t h a t repayments should be deferred five years until, it was assumed, the fruits of better production methods could be reaped. However, the complete neglect of any kind of cost-accounting and the utilisation of state enterprises for political purposes such as the creation of employment contrary to the economic requirements of individual enterprise, together with the corrupt practices of the political bosses, totally frustrated all hope that the improved equipment could be made t o pay for itself. 23 23

From the minutes of the meeting held at Branam State Farm on 22nd November 1964 under the chairmanship of Mr. Atta Mensah. Recorded by Mr. K. A. Asanto. The point is illustrated by the following example. The data are those of a Russian-led State Farm in the Volta Region.

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187

Obviously, expenditure is always very high in the early years of a new enterprise, but a closer look at the composition of the total expenditure, plus the fact that the man in charge of the projects warned that they had no use for additional labour after 1963, illustrates the state of affairs.

1962/63 Wages & salaries of Ghanaian workers. Wages & salaries of Russian workers. Fuel and Lubricants. Building and Construction. Consumable Stores. Freight and handling charges. Livestock. MiscellaneousT. &. T. Sheet, rate, rents, etc. Total expenditure: Total income:

f . s. d. 80,448.11.4 29,630. 0.0 28,116. 0.0 34,457. 4.6 21,487. 9.0 73,431. 5.9 166.17.6 716. 1.8 268,453. 9.9. 388. 0.5

1963/64 Wages & salaries of Ghanaian workers. Wages & salaries of Russian workers. Fuel and Lubricants. Buildings. Consumable Stores. Freights. Livestock. Miscellaneous. Planting materials. Fertilizers. Total Total

expenditure: income:

£. s. d . 143,822. 9.6 39,026. 0.0 48,407.16.5 45,160.18.1 36,357. 0.2 17,110. 6.7 4,232. 7.6 4,041.19.4 1,824.17.3 30,616.15.0 370,600. 9.10 19,338. 17.4

IX THE CASE FOR DEMOCRATIC GOVERNMENT

A. CULTURAL LEGACIES AND POLITICAL SUPERVISION

Altogether then, the recruitment of capital cannot and must not be separated from the political, administrative and cultural framework in which it is to be put to constructive use. Without effective means of supervision there can be no useful allocation and utilisation of investment. However, effective supervision can only be promoted by a free press in which interested parties may voice their criticisms subject to only one kind of restriction, that of the law of libel. Yet a truly free press and, what in Ghana may be even more relevant, a truly free broadcasting service, has a very clear social and educational content which is inimical to the social order and establishment dominating society today. It not only undermines the tradition of obedience which is deeply rooted in Ghanaian society and which the Church and the colonial administration presented as a virtue (to the exclusion of anyone's ability to criticise his "betters"), but destroys the hitherto unquestioned hegemony of the economically unproductive strata of society. In fact, it undermines the very fabric upon which the whole system of socio-economic inequality and exploitation rests in Ghana. But only the free flow of information protected by the freedom of association, by the unhindered right of all people to organise for the protection of their direct economic interests, can promote the socio-economic changes necessary to turn savings or foreign assistance into developmentally productive capital. There are risks involved, of course. Tribalism and demagoguery are only too obvious sources of such danger and cannot be ignored. However, these risks accompany a policy which has at least some chance of being successful, whereas all other policies of "development from above" appear to have no chance at all. The slow but perhaps only policy for promoting development under the given circumstances in Ghana must be one of stimulating the productive

THE CASE FOB. DEMOCRATIC GOVERNMENT

189

elements within the country by preventing foreign aid from coming in undesirable and politically dangerous forms. Termination of the influx of such foreign assistance would reduce the money available for maintaining that great reservoir of able people now employed in clerical and other not directly productive work, and make them find their livelihood where employment will necessarily be more productive. Some of the literate and most able manpower will thus be restored to sectors of the economy which now suffer from lack of initiative and low educational level of the labour force. Moreover, public criticism would mean that government would have to use its funds more judiciously, being forced not only to explain and publicly justify any expenditure, but also to give good reason why, for example, preference is given to one contractor rather than another in the allocation of contracts. The dangers are obvious. Pressure groups may gain control of the press and able demagogues may so misinterpret facts as to confuse the public; even so, this is preferable to the current almost unrestricted monopoly of economic decision-making by representatives of the economically least productive class. In this sense, the socio-economists who emphasise education as the most strategic sector for development are right. A necessary prerequisite for the economic progress of the people is the re-education of Ghanaian society, the shedding of the tradition that decisions from above be accepted without critical examination and without active resistance by concerted action if found unsuitable. In other words, the cultural revolution: the discarding of patriarchal or matriarchial and colonial conceptions of obedience, the fostering of independent thought and action, can make education the most strategic sector for development. It is not the sterile dissemination of formal schooling, ex cathedra, in which UNESCO appears to excel. This kind of education merely serves to inflate the ranks of that semi-literate urban proletariat which is a source of political instability and economic retardation. Only in conjunction with the cultural revolution can formal education play its tremendously important part in national development. Yet a cultural revolution can only progress if ill-directed foreign assistance is terminated and the socio-political power structure once again accords with the economic realities of society. Once this happens, foreign assistance can play an extremely constructive role. For example, foreign aid funds may be used to reinforce the

190

THE TTSE AND ABUSE OF FOREIGN AID

initiative and will of small-scale producers to increase production and output; prices may be supported and stabilised, if necessary at levels higher than those economically justified, and selective subsidies may be deliberately planned to encourage the production of economically more desirable products and to discourage those economically less desirable from the point of view of the people's welfare.1 Foreign assistance can be used to set up stations for purchasing farm produce at stable and well-advertised prices, subject to the selective encouragement bonuses previously described and without regard for current price levels. The difference between the supported purchasing price and actual revenue from re-sale of the products can then be made good out of foreign aid funds. In the agricultural sphere, the purchasing administration may apply foreign assistance for the construction of silos and for infrastructura] inputs such as roads, which may be necessary for the most economic disposal of its purchases. Foreign assistance funds may also be used to establish a development bank for advancing loans to investors, against satisfactory securities and at reasonable interest rates, even if these are below the current equilibrium rates. Here again, discriminatory arrangements can be introduced to discourage or encourage investments, while the administration of the bank should be completely open in all aspects to public inspection and criticism; perhaps, until such ciiticism becomes constructively powerful, it should be administered by a panel of independent experts from the donor country. Under these conditions of complete freedom of information and criticism and with the encouragement of political association to pursue the mutual economic interests of all sections of society, foreign aid may make its major contribution to the country's economic and educational infrastructure. Without supervision from below, there is little hope that foreign assistance can perform any constructive part in the development process. With such supervision, a more equitable distribution of incomes will stimulate economic progress on both demand and supply sides. More money in the hands of farmers may well strengthen the pull of effective demand for goods of intermediate cost which can be locally produced, while simultaneously increasing the push of supply by enabling farmers 1 For example, in some regions a bonus may be paid on the production of yams and other more nourishing crops, as against cassava.

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to purchase better farming equipment and giving them a reasonable incentive to do so. Farmers constitute most of the population of an underdeveloped country and are able to spend the greater part of their cash incomes on manufactures since they provide much of their own food;2 their "foreign-assisted" higher incomes may therefore provide the necessary effective demand which can help stimulate the growth of local urban industries. Their initial wants and requirements being not entirely unpredictable,3 investors could be found to develop enterprises to produce goods for their satisfaction. Such entrepreneurs could be given preferential treatment by a Development Bank with foreign aid capital, and high customs duties or outright restrictions could be placed on the import of foreign-made competitive goods. A Development Bank could use foreign aid money without being subject to the profitability considerations of commercial banks; it might therefore support a number of competitive enterprises to compensate industry for the loss of stimulus from foreign competition.

B. T H E MANIFOLD CHARACTER OF FOREIGN A I D

Foreign aid should be looked upon as a medicine which given at the right time and in the correct dosage may do a lot of good, but which may have the opposite effect if administered indiscriminately. Unfortunately, in the case of underdevelopment neither the patient nor the doctor is entirely free to take and prescribe what may be best. Both are subject to political pressures which influence the form, timing and dosage at which foreign aid is administered. As a result of this interference the treatment at best remains only a palliative, but more often than not does outright damage. Surprisingly, however, these pressures have few objective causes. Once national interests are separated from imaginary and sectarian from general and the whole problem is seen in its proper political context * According to Birmingham, Neustadt and Omaboe, op. cit., p. 108, in 1961—62 the rural population of Ghana, representing two-thirds of the total population, consumed 31% self-produced food; the urban population consumed only 7% self-produced food. * Ibid., p. 108; the total population of Ghana spent 11.7% of its income on clothing, 6% (ruru.1) on drink and tobacco, and 1.7% (rural) on durables in the late 1950s and early sixties.

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THE U S E A N D A B U S E OF FOREIGN AID

from both the aid-receiving and aid-donating viewpoints, the problem becomes far less complicated. The most frequent argument against the donors imposing conditions to ensure the developmental use of aid is that these would be politically unacceptable to the recipient. In other words, the government of the underdeveloped country would reject them and the donor country would be criticised for trying to interfere in the internal affairs of another independent nation. The implication is that, on the one hand, the government of the receiving country would turn elsewhere for aid, and on the other that public opinion in the donor country would suspect its own government of dishonourable (colonialist) intentions. In examining the first proposition, we must begin with the underlying assumption that some vital national interest of the donor country is served by giving foreign aid. What can this interest be ? Economically, most developed countries, as distinct from a small but powerful number of enterprises, have lost much interest in the underdeveloped world. Most of the colonial raw materials have been, are being, or can be replaced by synthetic materials produced by the developed countries. Most of the colonial markets are now so poor in comparison with those in affluent societies that their relative share in the world's effective demand for goods produced in "developed countries is becoming more and more marginal. Politically, the importance of the support of underdeveloped countries is likewise deteriorating, due to the inability of the United Nations Organisation to implement majority decisions, and due to their political instability. From the military point of view, the balance of fear between the great powers is maintained by nuclear weapons. The spreading of their intercontinental means of delivery entails that underdeveloped countries are no longer necessary as forward missile bases. The June 1967 War in the Middle East* the inability of the O.A.U. to deal effectively with Rhodesia, and the exploits of a handful of mercenaries in the Congo, further helped to reduce the significance of most underdeveloped countries as supporters of the military in developed countries in any war fought with conventional weapons. The reasons for the developed countries' continuous fear of annoying their underdeveloped colleagues by attaching conditions to aid must therefore be sought outside the realm of the donors' legitimate spheres of interest. Firstly, it is the fear of a vacuum, i.e., the fear that if the Americans, British, Dutch etc. move out, the

THE CASE FOR DEMOCRATIC GOVERNMENT

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Russians or Chinese will move in: this would be a good point if real and not imaginary interests were involved, but as things stand, it is very doubtful indeed. Secondly, the fear of being labelled NeoColonialist. A good point too, unless it can be shown t h a t this is not the case. The bad conscience of western colonialism and neo-colonialism in the past and perhaps even in the present, has so clouded the view t h a t confusion reigns everywhere. Thus, absurdity has reached a stage at which industrialised countries support, nay, even bribe and maintain in power a corrupt pressure group as the government of an underdeveloped country even when t h a t group is detrimental t o the country's progress, merely so as not to be accused of colonialism by these same enemies of their own people. This desperate wish not to be suspected of acting against the best interests of underdeveloped countries makes t h e developed nations do just t h a t . Obviously, the only way to escape this predicament is t o be completely frank both at home and abroad, and to support each decision by a statement of all relevant facts. Even if the economic, military or political interests t h a t the developed nations may still have in the underdeveloped countries have been grossly under-rated, does it really stand t o reason t h a t these interests can be protected by supporting dependent governments ? The amounts of aid these governments require to survive must of necessity increase from year to year. Eventually their cost will certainly surpass the value of the real or imaginary interests they are being bribed to protect. When this happens they will have to change their masters. Initially, the 'interests' may then pass from, say, Dutch t o German hands; later, perhaps from German to American, but eventually the " k e p t " governments will become too expensive for everyone. I t is then t h a t all those people "with nothing to lose but their chains" will rise, and find immediate support in Russia, or more likely in China. By t h a t time a situation not dissimilar to t h a t in Viet-Nam will have materialised. The only real way to protect interests is to prevent the gap growing between the "client" governments and the peoples of underdeveloped countries; this can only be achieved through greater equity in t h e distribution of the national income. Even from the viewpoint of people in advanced nations who believe t h a t their own interests have to be protected, it would be safer to abandon the various military or civilian governments who represent only themselves and economically unproductive groups 13 V—93

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(even at the risk that they might find support elsewhere). Clearly defined and constructive economic support should then be offered to any alternative government which represents productive forces and is able to accept "conditioned" aid if really in the interests of the people. This is, of course, interfering in the internal affairs of independent countries (by offering aid for developmental purposes only), but so is the aid given now. If it is made clear that this is the only kind of aid likely to be forthcoming, even the present governments will eventually, by the pressure of their own peoples, be forced to accept it. The danger is far more acute in developed countries, where interested economic pressure groups may be in a far more powerful position to influence the direction of aid into undesirable avenues. Numerous firms deal exclusively with underdeveloped countries, and their prosperity depends upon the amount of development aid that is available for purchasing their goods. Some of the most powerful companies in the world, Unilever and Shell for example,4 have trading and other interests in underdeveloped countries which may well be adversely affected by sudden changes in the established aid-giving procedures. Without doubt such interested parties will use their press and government connections to frustrate such changes. For this reason, too, it is absolutely necessary that all decisions concerning foreign aid and its utilisation be easily accessible to public inspection in both donating and receiving countries. This is the only way by which we can be reasonably sure that aid will be used for the purpose for which it is voted. Moreover, the contradictory nature of foreign aid must be made clear to the people of developed countries: they may then deprive of their mass support those business firms which promote government aid programmes for purely egoistic purposes. The Church and liberal public opinion must realise that to part with some of their money is not sufficient; they must make it their business to see that it is spent for the objective for which it is given. Otherwise all they do is to purchase indulgences — Der Taler in dem Kasten klingt — Die Seele in den Himmel springt. Finally, the public must be informed about the use to which its money is put in order to prevent officialdom, that dinosaur of mediocrity, from spending 4

In the shape of CFAO, UAC, GBO in West Africa. Other examples are Vlisco, Helmond (Wax block prints), V. M. F. (railway cars in South America), Leventis, U. T. C., Union Miniere, Shell, Standard Oil, United Fruit, etc.

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money unimaginatively. The price of freedom is eternal vigilance, and eternal vigilance is the price of true concern for the welfare of one's fellow beings.

C. AN AID-ASSISTED DEMOCRATIC MODEL FOR DEVELOPMENT

Assuming t h a t more vigilance would indeed prevent the misuse of aid, and t h a t under the resultant circumstances a government of an underdeveloped country such as Ghana would become more genuinely representative of its people, what then ? Restrictions on competitive food imports would raise the prices of agricultural products. This would slightly increase farmers' incomes and at the same time cause some part of the urban population to return t o t h e land. A considered detailed policy of supported agricultural prices to encourage production of the socially most desirable goods, together with a firm policy of purchasing all agra produce offered for sale at such prices, could furnish the necessary stimulus for more productive efficiency. The flow-back of some urban manpower t o agriculture and the somewhat higher incomes of the farmers would contribute to better farming efficiency in at least two ways. Higher incomes would make it possible for farmers t o purchase better equipment which the more educated manpower would be less hesit a n t t h a n t h e traditional farmers t o use. The enhanced incomes of farmers, who constitute perhaps two-thirds of the total population, would also provide a degree of effective demand for a range of industrial goods. These goods, unlike the high-cost luxury goods of the rich, will have a fairly wide market and may therefore give rise to a number of consumer goods industries. The latter could be protected from foreign competition and assisted by easy terms of credit. Eventually, any surplus funds over and above those required t o maintain price stability (i.e. the funds required for purchasing all agra-produce brought to the purchasing stations and selling it a t stable prices in towns, profitably or not), and over and above t h e amounts needed to facilitate easy credit terms for industry, should be used for infrastructural investments. Yet these investments should only be made when they assist existing productive enterprises. I n other words, infrastructural investments should follow rather t h a n precede development during the early phases. Initially, at 13*

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least, they should not serve to open u p new territories or sectors of the economy, but to consolidate and improve existing sectors in agriculture and industry. The acceleration of economic growth through constructing an infrastructural framework in advance of immediate requirements should be left to a later phase in the count r y ' s development; the new economic realities will then have had time to alter the socio-political structures, making them more suitable for judicious allocation of funds and implementation of longterm development plans. I n other words, neither internal state revenue nor foreign earnings from the export of primary products or from assistance in its various forms should be used at this early phase of development to create capacity in excess of immediate needs. I n time, the higher rural incomes on the demand side and a degree of internal competition, easy credits, and protection from foreign competition on the supply side, will nurse some reasonably viable urban industries into existence; the wage structure is then bound to be affected. Industrial wages will have to be competitive with "supported" rural incomes if industrial entrepreneurs are to a t t r a c t the labour they require. This will have two consequences. Firstly, urban workers will have more money t o spend on both agricultural and industrial products; t h a t is, effective demand will again be stimulated. Secondly, industrial entrepreneurs will be forced t o use their labour efficiently; t h a t is per capita supply will be stimulated. Altogether, the upward spiral of demand-generated supply and supply-generated demand will be set in motion in the familiar capitalist manner, with foreign aid merely serving as t h e lubricant. I n other words, competition among entrepreneurs for a greater share of the protected national market for industrial output, on the one hand, and competition for the available supply of labour between agriculture and industry with the resultant higher wagerates on the other, will stimulate entrepreneurial efficiency and, in time, a gradual substitution of machines for labour. I n Marxist terms this means the dual mechanism of capitalist development, namely, competition between employers for survival, and competition between labour and capital for a greater share in the fruits of production. Only after this capitalistic stage of development is attained can the level of economic sophistication be expected to be sufficiently high to permit truly commensurate results from infrastructural investments undertaken in advance of immediate needs.

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The apparently attractive Leninist or Stalinist development model which stipulates that history can be "cheated", that society may leap directly from the feudal to the socialist stage of existence (without passing through the capitalist stage), has never been conclusively proved.5 There is a fair amount of evidence available to demonstrate that in a number of regions in Russia, which are also the most obviously developed regions there today, capitalism was already well-advanced by 1914,® while many shortcomings in the implementation of Soviet development plans may well be traced to the fact that capitalism in great parts of eastern Europe has not been given the time to fulfil the "historical tasks" ascribed to it by Marx. Moreover, one may question the "non-capitalist" nature of the Soviet system altogether. For example, the capitalist stage of development may be defined as one in which "part of the productive capital may be owned by the state or by co-operatives but in which private ownership of capital is predominant".7 But even such a guarded definition will make the economic systems of the United States (where an ever-growing share of the major industries is state-owned) and Israel (where the national sector, i.e. that owned by the government, the Jewish Agency and the General Federation of Jewish Labour, includes no less than 47.7% of the country's national product, 80% of all land fit for cultivation, and close to 75% of all new investment), look very uncapitalistic indeed. The capitalistic stage may also be defined as that in which means of production are controlled by a section of the population and used to exploit the majority. With its stress on exploitation, this may in spirit be much closer to Marx's basically humanistic approach to history than the more purely economic definitions. After all, Marx was not concerned with economics as an academic exercise; his interest in the subject sprang from a moral conviction that something was wrong with a society which practices inequity in distribut-

5

The problem was very much a subject of controversy in the early part of the century between the Leninist, Kavtski and Ostrian schools of Marxist thought. • Vide G. Warren Nutter, The Growth of Industrial Production in the Soviet Union, (1962). 7 A. Seldon & F. G. Pennance, Everyman's Dictionary of Economics (London, 1965).

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ing the fruits of its labour. In other words, in Marx's view the exploitation of the many to satisfy the greed of the few distinguished feudalism and capitalism from the better (socialist) society towards which history was inexorably leading mankind. Looking at the stages of history from this more humanistic viewpoint, it may well be true that Russia has not yet entered the postcapitalist epoch. It may be argued that the communist statebureaucracy in the Soviet Union is neither more nor less than the specifically Russian manifestation of the exploiting class — controllers of the means of production in their own class interest. It makes little difference that in other parts of the world this class has assumed socially different forms, a hereditary pattern. In other words, Marx's contention that the tremendous concentration of capital and labour which is prerequisite to the rise of industrial society is the task of capitalism may still be correct, although appearances would have us believe that Russia has passed over this stage.8 All that this means is that capitalism may come in a variety of guises, depending on the specific social or cultural background of the people and their state of maturity. A distinction could then be made, for example, between British-style regulated capitalism and Russian-style state capitalism. The so-called western type of capitalism might be said to have fulfilled its historical task of concentration through the whip of fear, of unemployment and hunger, and the eastern type through the fear of Stalinist methods of coercion. Obviously, both types imply enormous human sacrifices which may well be the inevitable cost of industrialisation and economic progress. What is less obvious is whether or not in a society with the cultural make-up and economic level of performance as that of Ghana today, the first or second type of control over the means of production is more conducive to economic development. The question is whether the demand-dominated capitalist system or the supply-dominated system has a better chance to stimulate economic progress; also, which of the two systems, or rather what mixture of the two, can succeed and is practicable from a political point of view in underdeveloped countries today. ' The idea of the existence of a kind of state capitalism has been discussed by Djilas in The New Glass (London, 1964) and in a number of articles in the Polish magazine Pro Prostu soon after Stalin's death. Obviously, opinions are divided.

χ CENTRALLY-PLANNED AND SUPPLY-DOMINATED DEVELOPMENT MODELS

A. THE STATE AS AN INDEPENDENT AGENT OF DEVELOPMENT

Lenin believed, and many bourgeois economists still do so, that subject to the limitations of obtainable revenue, the State can be made into an independent agent of development. In other words, the State can assume the function of an autonomous investor. As such, according to Lenin, the state should invest· as much as possible and even more in productive capital assets because "only a largescale machine industry can also re-organise agriculture".1 Moreover, Lenin assumed, investment priority should be given to basic industries because it was by increasing their capacity that the output of both consumer and producer goods industries would also be raised. In line with this point of view, production in the Soviet Union was divided into two separate sectors, one concerned with the production of producer goods and the other with consumer goods. The latter was to satisfy consumers' demand at the existing level of output, whereas the former produced only for the augmentation of capital stock and for the replacement of technologically outdated equipment. In other words, demand for consumer goods was made into a function of the existing level of output — an entity decided upon by the planners. However, with planners committed to give strict priority to basio industries, the allocation to consumer goods was and still is bound to fall below the level of current demand. As, at the same time, this policy of sacrificing present needs for future advantages also required the maximum utilisation of internal resources "created by the labour of the workers, peasants and intellectuals", the surplus of unsatisfied effective demand was mopped-up by a variety of methods such as heavy taxation and price policies. Finally, it was » Lenin, Collected Works, Vol. Χ Χ Χ Π (Russian Edition), p. 434.

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also assumed t h a t the agricultural sector, which had served Russia well in Czarist times producing a considerable surplus of grains which were sold to western Europe and paid for much of Czarist Russia's industrial equipment, could be made to contribute even more to the financing of socialist construction. As farmers saved only a small share of what would be possible if they were forced to do so, a rigorous price and taxation policy would not only make them consume less but also work harder and, moreover, make good their reduced ability to consume. I n the terminology of Stalin's textbooks, economic development is achieved through a "fast rate of development of industry and the production of the means of production in particular, for it is t h e basis and key t o industrialisation and t o socialist development of the economy as a whole". "Socialist industrialisation", therefore is "the development of a large-scale industry, and primarily heavy industry, to a level where it becomes the key t o the re-organisation of the entire national economy on the basis of advanced technology, which ensures the victory of socialism and strengthens the country's technical and economic independence and defence capacity in face of the capitalist world. Yet, as the creation of modern industry requires huge material and financial outlays which cannot be obtained through capitalist exploitation, the share of the national income previously devoted to the parasitical consumption of the exploiting classes is used for socialist accumulation. The peasantry is released from paying mortgage debts and land rents. That enhances the possibility of enlisting the financial assistance of the country-side for industrial development. The revenue of state enterprises, foreign and domestic trade, and banks is also used for industrialisation." 2

B. SUPERVISION

Indeed, this is a very attractive model for rapid economic development. Substitute the word "colonialist" for "capitalist" and it is almost indistinguishable from many development plans in Africa today. B u t can it succeed? Firstly, the policy of foregoing the satisfaction of present wants in favour of greater advantages to be 8

Part of the above was formulated by Stalin in 1928; the rest is found in the textbook (for University students), Fundamentals of Marxism—Leninism (1964 edition).

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gained some time in the future is bound to raise a good deal of immediate opposition. I t did so in Russia. I t took the ruthlessness of a Stalin, and the long tradition of handling popular discontent by the inhuman methods of a highly centralised bureaucracy, which the Soviet government inherited from its pre-revolutionary predecessor, to pursue such a policy with some degree of success. Y e t even so, and with due allowance for the terrible losses inflicted on the Soviet Union by civil war, foreign intervention and World War I I , Russia's economic development is not so far in advance of Japan's, for example, to justify without reservation the high cost in human terms which this achievement required. Fortunately, African bureaucracy is still far less dehumanised than that of Europe in general and of Russia in particular. Tribalism and the extended family make it almost impossible for an African ruler to subjugate and control the population of his country to any degree approaching that of European dictators. Where family links and tribal connections are stronger than bureaucratic ties and traditions do not condone judicial murder, it may well, as Dr. Nkrumah now probably realises, be impossible to pursue a Stalinist policy of industrialisation.

C. AGRICULTURE Inasmuch as the development of agriculture was concerned, the policy failed even in the Soviet Union. No less an authority than Mr. Khrushchev at the 21st Congress of the C.P.S.I., made it known that agricultural production had not regained its pre-World War I level of total output even as late as 1960. The superficially glib idea that farmers can be made to increase their output by taxing them beyond what they can actually pay out of their level of current production, and that their level of consumption can be reduced by the same method so that a rising surplus is created for financing the growth of the industrial infrastructure, proved to be deceptive. The failure of the attempts in this direction in the Soviet Union, eventually leading to the organisation of collective and state-farms, which in turn were far from really successful, is too wellknown to be retold here. Far from making the kulaks work harder, Stalin's agrarian policy merely deprived them of what initiative they may have had to do so, starved them to death, or taught them to conceal

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as much as possible of their productive capacity and to consume as much as possible of their output to prevent it falling into the hands of the State. The state-farms did only little better, though they were at least less starved of capital equipment. The allocation of priorities for investment which gave first place to basic industries in the industrial sector, further added to the stagnation of Russian agriculture. Indeed, it made total nonsense of the hope that agriculture could be made to increase its contribution towards the country's industrial development. Even with a more positive attitude, farmers would have found it very difficult without heavy capital investment to increase production sufficiently to keep pace with population growth, the relative diminution of people employed in agriculture compared to those living in towns, and the rising demand for industrial crops. Agriculture thus became a significant constraint to Soviet economic progress. Many planners in Africa tended to repeat the Russian mistakes. In making investment decisions, they gave absolute preference to industry over agriculture, regarding the latter as an inferior and colonial sector. Further, they similarly assumed that farmers can be forced to spend less and produce more when subjected to rising direct and indirect taxation and appropriate price policies. Finally, they too believed that the agricultural primary-product export sector could be made to earn increasing sums of foreign exchange to pay for the rising requirements for imported capital goods. In fact, it should have been obvious that without considerable investment it is almost impossible in Africa today to produce sufficient food to feed the increasing population, let alone the surplus required for the faster growing towns and for industries which depend upon agricultural raw materials. Similarly, experience has shown that there is a limit to the exploitability of farmers. There is a point at which farmers lose hope; at which they revert to subsistence farming or even fruit gathering, and use their subsequent poverty as a defence against the state's rapacity. With no investment in agriculture, this point is always close at hand. "One may sheer a sheep but one must not skin it if one wants a steady supply of wool". The theme of the farmer who is harassed by a rapacious lord or landowner into abandoning his farm and then starves in the wilderness or inflates the camp of the starving unemployed in the towns, is sufficiently known in world literature. In fact, Ghanaian farmers have shown a tendency to refrain from planting new cash crops since

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1962, when it became increasingly obvious to them that they would not be permitted to reap the advantages. As for the belief that the sale of primary products to developed countries can serve as the great lever to jack up underdeveloped economies, it is difficult to see how this can be done. How can such an export-oriented policy be successfully pursued when land has competitive uses for foodstuffs and raw materials, when there is increasing population pressure, when considerable capital inputs are lacking, and the peasantry is not strongly motivated ? How can a country stake its future on such a policy when the demand in developed nations for cocoa, rubber, sugar etc., is limited, when substitutes for these "colonial" products become increasingly available, and a number of underdeveloped countries compete for the same markets ? For example, Ghana's cocoa exports increased continuously for many years, but revenue from those exports could hardly be held constant. Increasing competition from countries like Brazil and recently Nigeria, together with the marginal rise in cocoa consumption in the western world, depressed prices to an extent that made nonsense of most of the financial calculations upon which Ghana's Seven-Year Development Plan was based. It is a sad observation indeed that while cocoa production made considerable inroads into the land available for food production and while it increased the demand for labour in the face of a growing population crisis in many cocoa-producing parts of Ghana, it did not really earn a commensurately greater amount of foreign exchange. Even a greater diversification in export crops than is presently the case in Ghana and many other primary-product exporting countries cannot really solve the problem. This would have to be done at the expense of land fit for food production, while almost every product would still run up against stiff international competition. Unfortunately, climate and soil are very similar in a great many underdeveloped countries. Altogether then, it is fairly obvious that the principle of comparative cost or comparative advantage, which stipulates that international specialisation and exchange be to everyone's advantage, holds good only under given technological conditions and among partners of more or less equal economic development. To base the prospects of economic development in present underdeveloped countries upon a division of labour which allocates to them the sup-

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ply of primary products and to the developed countries the supply of manufactures, is not only returning to the era of colonialism but condemning the peoples of the underdeveloped world to remain hewers of wood and drawers of water for the developed world. I t can neither pay for, nor stimulate industrialisation or the closing of t h e gap between t h e rich and poor. D. INDUSTRY

Inasmuch as the construction of industry and particularly heavy industry is concerned, the implementation of supply-dominated models is not likely t o meet with success. The construction of industry today requires a very high concentration of capital, a reasonable level of education and technology, and perhaps also a good supply of raw materials and subsidiary industries. Without these, no industry can hope to be competitive; without at least some of them, no industry can conquer foreign markets or reduce prices sufficiently to make a real impact upon domestic demand. Very important changes have occurred and are still taking place in industry with regard to the relative importance of the various inputs of the agents of production, land, labour and capital. Perhaps the most relevant from this point of view is t h e diminishing share of labour and the rising share of capital. More and more often we find t h a t efficiency of production is determined by the quantity and quality of the equipment rather t h a n of labour. Half a century ago it was still true t h a t in many important industries cheap labour constituted a relative advantage, but this is hardly so today. Yet capital, as distinct from labour, is precisely what is most wanting in the underdeveloped countries. This is not all; modern industry, t o be efficient and competitive, is substituting machines for labour, yet even the labour it continues to need is usually of specific quality. When Charley Chaplin parodied industrial society in his famous film of the early thirties, "Modern Times", his hero, the small industrial labourer, was unskilled and poorly educated; it was sufficient t h a t he could do one single repetitive operation, such as turning a screw, at the required speed. Since then t h e requirements of industry have changed. The simple repetitive job of the unskilled worker of the early 20th century is now performed by machines which do it more reliably and efficiently. I n fact, labour requirements for manufacturing have come full circle back to the days of

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the Guilds and ancient Trades. Again a long apprenticeship, often higher education, and a high degree of responsibility is necessary t o do a useful job in modern industry. Where are the peoples of Africa to find this kind of manpower at short notice ? The hiring of expatriate skilled labour is extremely costly and causes many social and political complications. The training of local labour up to the required standard is equally costly and also very lengthy. Moreover, the tradition of careful responsibility in the use of complex technological equipment requires certain attitudes which cannot be acquired by schooling alone. Decades of harsh labour discipline, of self-ownership of equipment, of belief in the dignity of labour, of strict supervision and heavy penalties for defaulters and indeed, a whole educational system at school and in the home where children were encouraged t o examine and to take care of "their" things, were required t o develop these necessary labour attitudes in the developed countries. There is no doubt that, under favourable circumstances, Africa may produce its well-motivated and responsible labour force in a much shorter time t h a n Europe, J a p a n or the United States, but are the circumstances really more favourable? A nationalistic upsurge, a kind of sustained "black-power" enthusiasm, or Zionism, may well help to provide the necessary motivation or attitude, but where is it to be found in Africa today ? And if it is found, for how long can it be expected to continue ? After all, it is the present social structure, the perhaps specifically African class structure and educational system which foreign aid programmes help to maintain, t h a t hinder the development of truly constructive African nationalism though destructive and even racialist trends may be encouraged. A constructive spirit of the kind now necessary in Africa was evinced in the heroic twenties in the Soviet Union, and t h e no less heroic 1930s and forties in Palestine. The former was animated by t h e belief in Socialism, the latter by the wish to give the Jews a territory and productive existence. I n both cases, it was accompanied by at least a semblance of social justice, equality, and participation. Again, the installation of modern equipment is already far more expensive in most underdeveloped countries t h a n in North America or Europe. The reason for this discrepancy lies not only in the greater transport costs, but also in the fact t h a t most buyers from underdeveloped countries are inexperienced and many easily corruptible.

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Insurance premiums are extremely high because harbour, storage and transport facilities are often very poor indeed; each consignment is usually subject to a great deal of breakage and to considerable losses from theft, which in most cases is quite senseless. Further, particularly in tropical climates, the equipment often arrives at its final destination in poor condition and then continues to deteriorate and depreciate much faster than in North America and Europe. People with practical experience in the use of mechanical and fairly sophisticated equipment in the tropics agree that a piece of machinery which in Europe is reckoned to depreciate over a period of five years, during which it requires about 40% of its initial cost in replacements (spare parts), depreciates in the tropics in three years, during which replacements demand approximately 100% of the initial cost. As from the very beginning, the equipment is more costly in an underdeveloped country, the total difference in costs is quite staggering.3 Add to this the fact that, for the social and educational reasons mentioned earlier, supervision of the output is also very poor and that consequently the finished product is often inferior to that produced with the same equipment in Europe or North America, the reasons for Africa's inability to conquer foreign industrial markets seem fairly obvious.4 Finally, there is the absence of supporting industries. At the industrial level, we are accustomed to speak of various kinds of integration. Vertical integration is the process by which manufacturers, in order to lower costs, move a stage backward or forward in the chain which leads from material and component to manufacture and sale. Horizontal integration is the process by which firms making the same or similar products amalgamate to achieve optimum exploitation of equipment and reduce market fluctuations. Diagonal integration "connotes the existence of (ancillary) sei vice activities which fit 'slantwise' into the main activity of a firm, e.g. a machine-repairing service or carpenters on the staff etc."5 3 See, for example, the comparison made b y Mr. Yair Roth and the present author of the cost of agricultural mechanical equipment in Israel and Ghana, Africa Quarterly (1966). 4 Take, for example, the Tema W a x Print factory where costly up-to-date machines and good materials are employed to produce an inferior product. During the author's visit to th ; s factory, the supervisor simply forgot t o switch on the inspection lights. • Everyman's Dictionary of Economics.

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From the point of view of an industry as a whole, diagonal integration may well be the Achilles heel of most underdeveloped countries. Vertical integration may give rise to a useful chain of challenges and responses. It did so in the English cotton industry during much of the 19th century. Horizontal integration may advance economies of scale unless, of course, it becomes destructively monopolistic. Yet the lack of opportunity for achieving a reasonable degree of diagonal integration in almost all underdeveloped countries impedes the development of any really significant industrial enterprise. In a backward region sufficiently developed ancillary industries are simply not available to support each other. Yet it is a fact, for example, that to run efficiently and to be internationally competitive, a motor car industry needs at least some form of association with firms producing car batteries, tyres, electrical equipment and perhaps even machine components and tools. Similarly, a petrochemical industry requires not only a good supply of natural oil but a whole range of ancillary industries utilising oil by-products and wastage in the production of goods as diverse as chemicals and fuels, tar and synthetic fibres, plastics and medicines. To be really competitive, a key industry thus needs a) sufficient outlets for its by-products, and b) enough ancillary industries in its vicinity to facilitate an uninterrupted and continually improving operation. Their absence is of course the very essence of economio backwardness. Until the last quarter of the 19th century much industrial progress took the form of spreading utilisation and improvement of labour-saving equipment, which raised the per capita output. At that time, the presence of sufficient ancillary trades was enough to assure competitiveness. Since then, the progress of science, especially in chemistry, has radically altered the position. The fantastic improvements in the exploitation of materials, their industrial by-products, and what had previously been considered wastage or useless matter, have so raised the range and per unit output of materials that few industries hope to be internationally competitive without satisfying also the first requirement of modern industry, that is, without finding sufficient outlets for their byproducts. With few exceptions, it therefore makes little sense in most underdeveloped countries to invest heavily in the construction of very advanced industrial enterprises in the hope that they may mushroom ancillary establishments into existence and break competitively into world markets. To be competitive they need many

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vertical and diagonal links, yet the latter can only develop after the artificially advanced industry has entered international competition on an equal footing. I n the best case, the industry would have to be subsidised for perhaps decades to fill the gap between production costs and the selling price forced upon it by its more favourably located competitors. I n the worst case, it may never stimulate the growth of ancillary establishments and will remain a costly monument to the folly of economic development planners. To effect a breakthrough in one sector of the economy, simultaneous progress must be made along a large part of the whole industrial front. The idyllic picture which some economists borrow from historians of the 19th century English cotton industry, showing t h a t industry developing its "backward" and "forward" stages of production and simultaneously distributing the seeds of industrial growth over ever-wider sectors of the economy, is neither accurate nor really relevant as a model for the underdeveloped countries today. Throughout the 19th century the English cotton industry was well in advance of almost all its competitors and was able t o pull other industries behind it. This cannot be the position of any industry in the developing countries. Even ignoring the qualitative manpower problem and assuming t h a t some international agency supplies all the capital for establishing not only a major industrial plant but also its vertical establishments and organisations, it is questionable if, without sufficient ancillary industries, t h a t plant could break competitively into the world markets with its product. The efficiency gap between the rich and poor countries has become too wide t o be bridged by wage differentials in an era when productivity is determined by technology and organisation. The only way to overcome this constraint would be to provide a whole industrial basis at once; this, in effect, was what the Marshall Plan did for Europe. However, the two cases, t h a t of post-war Europe and of the underdeveloped countries, are dissimilar. I n Europe, attitudes, education, indeed the whole culture pattern, were fully prepared for an industrial recovery, all t h a t was lacking was the capital destroyed in the course of the war. This was provided by the United States; the Marshall Plan merely filled a gap. B u t much more than capital is missing in the underdeveloped countries. A purely supply-dominated model for development can therefore hardly be the answer. The essential point remains t h a t capital aid can only lay a commensurate developmental role in an under-

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developed country when accompanied by rising incomes of a large proportion of the people, i.e., by a rising and effective local demand. It cannot stimulate sustained economic growth by trying to force assisted industries on to sophisticated markets. Japan's success in selling her industrial produce abroad was due to special circumstances; even then, she had developed this trade long before the gap between the economically most advanced and the less advanced countries had reached its present state, at the cost of an incessant need to increase her trade monopoly by wars of conquest. Finally, the people of Japan, as distinct from the small £lite, did not share in the fruits of industrialisation until after World War II when the occupation forces, for reasons of their own, totally destroyed the country's traditional socio-political power structure. In summary then, it appears that very highly centralised planning and allocation of priority to supply-dominated schemes with, perhaps, a bias towards export industries may not hold the key to the solution of the economic problems of most underdeveloped countries.

14 V-93

XI STATE-DIRECTED AND DEMAND-DOMINATED MODELS OF GROWTH

A. POLITICAL CONSTRAINTS

What then are the alternatives? I t is unlikely t h a t anyone today would propose the total abolition of state interference in the economy. Nor is it likely t h a t many people believe t h a t industrialisation is unnecessary to raise a nation's standard of living, or t h a t it can be left t o take place gradually in response to challenges arising out of the economy without exogenous stimuli. The differences of opinion centre around the degree and nature of state interference rather t h a n about its desirability as a whole. Unfortunately, these questions cannot be entirely separated from the political power structure of the peoples about whom they are asked. I n the case of Ghana, for example, although more t h a n 60% of the population are farmers and unquestionably contribute the major share to the country's national output, their political influence is very small indeed. The reasons for this unhappy state of affairs are fairly obvious. Their occupation causes farmers to live in small separate communities, making it difficult for them to organise effectively in pursuit of their nation-wide mutual interests. Moreover, as they provide a good many of their own requirements, they feel less compelled to organise t h a n do urban workers. I n a predominantly subsistence economy, they may also feel t h a t their prosperity or misfortune is far more related to the weather, about which they can do nothing, t h a n t o human institutions which they may hope t o be able t o influence. However, as long as they do not organise, there is little hope t h a t they will be able to exert the political pressure necessary for causing the national income to be reallocated in a way more commensurate with their contribution to it. The first objective of those wishing to promote domestically stimulated economic growth must therefore be to organise the country's farming community to a degree which will counterbalance the political pressures of the

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urban population. This will inevitably be a complex and difficult matter. On the positive side, the cocoa farmers, organised into the cocoa marketing board, long held political hegemony in the country during the colonial period. Both their political hegemony and their organisational potential, however, were broken after independence, the former being lost to the civil service and t o a smaller degree t o t h e towns upon termination of British rule in Ghana. Their organisational potential was lost through Dr. Nkrumah's deliberate efforts t o substitute his imposed administrators for the organic leadership of the Board. I n colonial days, cocoa farming had enjoyed preferential treatment, the foreign rulers being for their own reasons directly interested in a steadily growing supply of cocoa. Consequently, cocoa farmers were supplied with easy loans, scientific advice and, where necessary, with certain infrastructural inputs such as roads. As a result, cocoa farmers became relatively rich and the ownership of cocoa trees a status symbol in many parts of Ghana. When the wind of change began blowing in West Africa, a new class consisting mainly of the educated saw its chance to wrench t h e hegemony from the cocoa farmers. This was made relatively easy for them by the quick withdrawal of the colonial overlord. The combination of self-interest and genuine nationalistic aspirations on the part of the educated, backed by the ill-defined hopes of the Ghanaian masses for a brighter and materially better future, practically swept the old guard out of position. Thus, not only the instruments of government but also the social leadership fell into the hands of the bureaucracy. This process was reflected in the rapid decline of Dr. Danqua's United P a r t y and equally rapid rise of Dr. Nkrumah's C.P.P. Unfortunately, the transfer of social hegemony to what was to become an essentially parasitical stratum of society had a profound cultural impact. From a leadership which had slowly and laboriously acquired wealth by planting trees and waiting patiently until they bore fruit, cultural hegemony passed into the hands of an impatient leadership expecting easy money. The moral tone of Ghanaian society was thus transformed in a way which made for disintegration. Rampant greedy individualism became socially acceptable provided, of course, t h a t it was crowned by success. I t was not t h a t the Ghanaian did not recognise corruption for what it was, but he became tolerant towards it. H e began to understand and resign himself to an attitude of "unfortunately 14*

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this is the way of the world". Yet corruption could not have spread without reward; without the dissipation of the country's reserves and the influx of unearned money from abroad, the ruling group would not have been able to distribute rewards and the social hegemony would have returned to those who were economically entitled to it. It is for this reason that, now that the treasure has been spent, the termination of ill-advised foreign aid may bring about a regeneration of Ghanaian society. In other words, there is hope that in the absence of outside economic support the hegemony of the present ruling class will collapse and with it much of its economically and morally harmful concomittants. Th' j is one reason why, given the right circumstances, the chances for organising a politically effective rural force are far from hopeless in Ghana. There is still another reason for hope. As we stated earlier, the Ghanaian cocoa farmers achieved a high grade of productive organisation in the cocoa marketing board during the colonial period. Consciously or unconsciously, Dr. Nkrumah realised the potential danger to his government inherent in this organisation, whose decline was directly connected with attempts to replace its administrative apparatus by his own nominees. Objectively, the cocoa farmers were the only people who stood to lose from severance of close relations with Britain and from changes in the country's economic structure. They had enjoyed preferential treatment by the colonialists, had a secure market for their produce in England, and formed the State's most important source of income. Dr. Nkrumah's decision to industrialise was bound to reduce their preferential treatment; his attempts to diversify the economy and make Ghana politically independent of England and the West were bound to reduce the cocoa farmers' national importance and disrupt their traditional markets; his growing financial needs for his development plans and for the bureaucracy could only be satisfied at their expense as they were almost the only really taxable class in Ghana at that time. Dr. Nkrumah was consequently left with no alternative but to replace the organisation of the cocoa-farmers by one loyal to himself. Unfortunately, this was unsuccessful. Firstly, the new cocoa administration was corrupt. Secondly, it did not enjoy the trust and confidence of the cocoa farmers as had the original administration. Why was the new administration so very corrupt even by West African standards? Again, the answer is complex. Firstly,

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it should be remembered that the new administration was recruited from a stratum of society which was outside both the traditional leadership and the established civil service. In fact its recruits came from the "socially displaced" strata of Ghanaian society. Secondly, the recruitment of this apparatus coincided with a period of great social and political upheaval in Ghana, in the course of which old values were being shed and new ones were not yet firmly established. Bearing in mind that economic reasons made Dr. Nkrumah unable to rely for support upon the traditional rural leadership, and that psychological reasons made him also unable to rely on the basically Anglophobic civil service, 1 it appears that he was left with no alternative but to create and structure a new administrative organisation in the hope that it would be loyal to himself and his ideas. A party apparatus was thus set up to take over the economic and political duties of both Chiefs and civil servants, who naturally resented this newfangled elite and its competition for social ascendancy. 2 And what about the new party "aristocracy" ? As parvenus frequently do, they tried to assimilate and find their own identity. Unable to model themselves upon traditional leadership which was founded on lineage and property, they accepted the value system of the colonial civil service. In other words, they accepted the cultural hegemony of the British colonial legacy. However, the colonialists had tried not only to keep their administration above and apart from the people, but also developed their own cultural pattern and way of life — a way of life which, except for outward signs such as playing tennis and dressing for dinner had very little in common with western civilisation. This, then, the new party administration attempted to emulate. Instead of a socialist nationalistically-inspired administration, Dr. Nkrumah thus nursed into existence a new organisation which only too readily accepted the cultural leadership of the old administration, denuding it of whatever vestiges of moral scruples and restraints it still had. More1 On the one hand, civil servants were "anti-British" because they wanted the Englishmen's jobs; on the other hand, they made tremendous efforts to imitate their ways. 1 For example, the term "prison graduate" which, in earlier times, had implied that the person had made a sacrifice for the good of the nation, i.e. that he was a patriot, was now applied to party officials with a very different connotation.

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over, as the new administration was unable t o justify its status vis-ä-vis the old by an equal level of education or any other attainment, it borrowed from the traditional rural leadership the one element which could be imitated, namely, the prestige t h a t comes with property. Unfortunately, and this may partly explain the unpleasant trend towards completely unreasonable ostentation, their property unlike t h a t of the traditional elite had to be seen for it to be believed in. Very soon, Nkrumah's party officials actually made a point of demonstrating to the people the wealth which all knew could only have been acquired by corrupt practices. I n doing so, they in fact legitimised corruption and removed its social stigma. Indeed, they caused a negative "cultural revolution" which profoundly shook the country's value system. Another factor which assisted this transformation was the nature of Dr. Nkrumah's political regime. I t s need to crush all real or imaginary opposition created a peculiar atmosphere rife with fears of denunciation on the one hand, and with a wide area of impunity on the other. The tribal and family ties always strong in West African society were now reinforced by the need for mutual protection against outsiders. Before long, whole departments of government became the exclusive reserve of some family or tribal groupings. If we add to this the hierarchical structure of the administration as a whole and the absence of a free press, t h a t is of public supervision from below, the picture showing the growth of corruption becomes clear. By 1965, the people of Ghana were almost defenceless against the growing rapacity of the various agents of their government and ruling party. I t was not surprising, therefore, t h a t the farmers had little confidence in the newly imposed officials of the marketing boards, most of whom acted in a way which fully justified their distrust. The apparent failure of attempts to organise the farmers in one form or another was thus caused not so much by their inability t o cooperate successfully but by the way in which organisation was promoted. Obviously, Ghanaian farmers are neither more nor less suspicious of their neighbours t h a n farmers elsewhere; unlike farmers in many other underdeveloped countries, however, they have given positive proof of their ability t o organise for the promotion of their economic interests, when allowed to do so in a form suited to their traditional modes. I t was the imposition of outside officials which primarily reduced the effectiveness of their organisations.

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There is good reason t o assume that, left to themselves, Ghanaian farmers will organise effectively to promote their economic interests on the basis of cooperation between extended families, or closelyknit village communities. They have done so in the past and may do so again once the distorting influences are eliminated. I n other words, once the sources of finance which maintain the alien officials cease to flow, it is more than likely t h a t traditional leadership will reassert itself and under the new conditions, will capture much political significance. Once it becomes clear t h a t the government can no longer be milked, a change in attitudes towards self-help may also take place. Ghana has a long-standing tradition of cooperation in constructing and maintaining roads or paths. This has almost died out in many parte of the country because villagers began to expect the Government or timber firms to do the work for them. Many similar traditional sources of rural cooperation have stagnated for a decade but are not altogether dead; they can be revitalised fairly easily if conditions change. If the government can no longer pay for work which farmers are able to do themselves, and if a genuinely assisted marketing system makes such efforts worth their while, it is more t h a n likely t h a t the farmers' economically vital cooperation will recommence and will improve very rapidly. Eventually, it may also lead to their political organisation. Under these conditions, the introduction of civil government would almost certainly restore the farmers' confidence and revive their ability to become politically effective. If, at the same time, foreign aid can be utilised for supporting and stabilising farm produce prices, the farmers m i y also become economically effective as consumers of locally producible industrial products and purchasers of increasingly more advanced agricultural inputs. A selfsustained mechanism of economic progress would thus be set in motion from the rural demand side. At the same time, the education system may undergo a profound transformation. With no money t o pay for further inflation of the civil service, but with obvious economic advantages to be gained from applying knowledge to farming and manufacture under a supported and protected price system, a more than even chance for redirecting the education system towards more suitable goals should be evident. I n time, the entire social value system may be freed of its colonial and post-colonial legacies.

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Foreign aid and advisors could here play an important constructive role. Foreigners could provide the country with fellowships and with institutions for higher learning particularly in the natural sciences, for which students must be selected on the basis of competitive examination. If such institutions can be kept free of local pressure, if they do not insist on filling all places even though sufficiently able candidates are not available, and if students are not provided with servants as is the custom in African universities, they may help considerably to clean up the system. In time, the demand for places will become so strong that local factors may cause similar institutions to be set up which, for obvious reasons, will be under pressure to emulate the others. In this way, the education system may be restored to its former elevated position. The coming of civil rule, if it should really come to Ghana in substance rather than form alone, will gradually instil in the farmers new confidence in their ability to pursue economic ends by political means. Their subsequent growing prosperity may open up new avenues in education and their political ascent give rise to a new kind of political reality, bringing to an end their tacit submission to decisions of the unproductive ruling classes of the colonial and post-colonial eras. The realisation will grow that the task of government is to serve not to subjugate, and that it holds office in trust for one purpose, namely, to govern in accordance with the needs of the people as expressed in the electorate's numerical and economic power structure. The new reality would not only prevent those who govern from adopting paternalistic attitudes towards the people, but help them to resist pressure by the unproductive classes who wish to appropriate an undue share of the national product. Incidentally, it would also put an end to the unhealthy habit of Ghanaian governments of interfering unduly in almost all economically motivated strikes on the side of the employees. Foreign intervention will become much more costly in both economic and political terms: it will no longer be sufficient to bribe a thin stratum of society at the top; the majority of electors will have to be given a real advantage. Perhaps most important of all, the new reality may produce the psychological revolution so necessary for promoting economic development, i.e. workers and farmers will become used to the idea that what they earn is theirs by right and not by the benevolence of their betters. This is important; without such a change of attitude, there can be little hope that

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national income and national resources will be reallocated in such a way as to promote economic progress. Indeed, the educated labour force may even be reallocated to the sectors where it will yield the best results. As farmers form the majority of voters in Ghana and will continue to do so for some time to come, their vote may well produce a new scale of expenditure preferences in which the construction of roads and silos takes precedence over office buildings, and fertiliser plants over prestige items. In other words, majority government may direct expenditure towards economic needs and away from ostentation. It will become more difficult to import competitive foodstuffs to pacify the urban proletariat, but the government will be provided with the mass support it requires to uphold such a policy. The importance of the political structure, therefore, must never be underestimated. Moreover, a declaration by the national government of an underdeveloped country that certain forms of aid are unacceptable for economic rather than political reasons would have farreaching consequences on the whole problem of aid administration. Progressive forces in donor countries would be aided in their efforts to prevent their governments from serving as agencies for transferring a share of the national income into the hands of exploiting manufacturers, exporters and trading firms. Scrupulous people would be helped in their attempts to hinder development schemes being used as veils to disguise the greedy designs of aid donors. Unless development aid from economically-advanced countries is totally abolished, it will undoubtedly be redirected along more desirable avenues than those presently followed. It may finally take the form of fertilisers and simple machinery suitable for raising the output of small-scale farmers or industries, without frustrating the long-term plans and aspirations of the developing nations. Organisationally, Ghanaian society is still in the grip of the extended family as distinct/ from the more horizontal class stratification of individuals of industrial societies. It may therefore be desirable to look upon these extended families as natural carriers of development. There may be no good reason at all to superimpose Western-style cooperatives where the indigenous framework of cooperation already exists and functions. Within the extended family the degree of mutual confidence is much greater than between individuals in other groupings; this may well make it more suitable

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t h a n foreign-style cooperatives as the basis for economic cooperation. I t would certainly be more in line with the traditional ways of life. Indeed, even tribal associations may be used if larger organisational units t h a n extended families are necessary for implementing certain schemes. There are many examples showing the possibility and effectiveness of such familial cooperation; the Cocoa Marketing Board in the pre-Nkrumah period provides all the necessary evidence t h a t the Ghanaian farmer knows how to organise if it is likely to be really profitable for him. There are many less publicised examples of this sort, the fishing industry being a case in point. Although the colonial credit system which favoured cocoa farming made profitable fishing very difficult, fisheries still made considerable progress under a mutual trust system provided by the extended family. Indeed, the fishing industry is an outstanding instance of the Ghanaians' ability to recognise their advantages and t o mechanise as soon as the opportunity arises. The greatest impediment to profitable fishing along the Ghana coast is the difficulty of crossing the very heavy surf. This natural difficulty can easily be overcome if canoes are equipped with modern outboard motors. I n spite of the widely held m y t h t h a t time is irrelevant to an African, as soon as outboard mctors became available in Ghana hundreds of poor fishermen cooperated to buy them. The number of outboard-motor-powered canoes increased from 205 in 1959 to 1,700 in 1961. The weight of fish landed increased correspondingly, while fish prices did not fall either in absolute or in relative terms. I t is true t h a t by 1961 the outboard motor had also become a status symbol. But what if it had? Why shouldn't farmers have cocoa trees as status symbols and fishermen outboard motors ? After all, both perform a progressive role in the development of the Ghanaian economy. But this is hardly the case with the civil servant or trader who buys a Mercedes-Benz as his status symbol. Many more progressive status symbols might be desirable; for example, the small Japanese tractor or the mechanically-equipped processing plant, in fact, any kind of symbol able to perform an economically valuable taek. There is no reason why the dual nature of such status symbols should detract from their value as agents of economic development. Only the economically-useless status symbols of parasitic consumers, or governments which attempt to veil their ineffectiveness with impressive buildings (even unused factories), are really damaging t o

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economic development. Let irrigation projects, the use of suitable mechanical equipment, and additional crops other t h a n cocoa and lime, become status symbols and the thorny motivation problem will be solved. Progress in this direction was well under way when it was restrained by the heavy-handed interference of Dr. Nkrumah's government. In short, development of the Ghanaian economy may well depend upon representative government, and representative government upon the people's ability to organise. Such organisation can only evolve out of the traditional patterns of social organisation and cannot be forced upon society from above, as Dr. Nkrumah tried t o do. Government can assist the development of growing collectives by making them the partner rather t h a n the subject of economic and political activities.

B. PLANNING

The first attempt at deliberate planning in Ghana, then the Gold Coast, was Guggisberg's Ten-Year Development Plan of 1919. On the whole, this laid the foundations for the Gold Coast's relative prosperity in the years t h a t followed. I t provided the country with a good harbour in Takaradi, and a rail and road system which connected the port with the major mining and timber areas. Essentially the Guggisberg plan provided for infrastructural investment, from which both the colonial economy and the people of the Gold Coast were able to derive considerable advantages. Unfortunately, these desirable beginnings were not continued during the depression of the thirties, and were almost totally neglected during the war. When planning was resumed in the early fifties, its nature was not essentially different to t h a t of the twenties. Again, the main emphasis was on infrastructure, although cocoa had by this time altered the economic map and structure of the country. With the granting of a greater degree of self-government to the people of the Gold Coast and the eventual total withdrawal of the British, a widespread feeling of urgency in the new state of Ghana led to attempts to implement long-range plans in reduced time. Thus the 1951 Ten-Year Development Plan was proclaimed "substantially" completed in 1957, and the following fiveyear plan was launched in 1959. Again, neither of these plans was

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basically different to its predecessor. They concentrated on the creation of infrastructural elements, and in effect were little but schemes for the utilisation of government funds for promoting selected sectors of the economy. The one respect in which the 1959— 64 development plan really differed from colonial plans was in its provision for the Volta River hydro-electric project. For political rather than economic reasons, this plan was abandoned before completion in 1962 and replaced by one which reflected an altogether new approach to planning. The new plan, known as the Seven-Year Development Plan 1963/4 to 1969/70, was a deliberate attempt at comprehensive direction of the country's economy. Investment and production targets were set not only for the government sectors but also for private sectors of the economy, while quantified assumptions were made on the basis of physical production and welfare criteria. Essentially, it was no longer a reformist development project, as are most welfare plans, but might well be termed a Russian-type target-oriented comprehensive plan. Unfortunately, although theoretically sound, the plan was practically inapplicable. Firstly, the planners had taken too little account of traditional social and cultural impedimenta, while no adequate apparatus was permitted to operate to ensure public supervision. Secondly, financial assumptions made about cocoa exports and prices did not materialise. Thirdly, although the plan stipulated that great efforts should be made to increase agricultural productivity and to expand consumer goods production, little was actually done in this respect. In fact, although about 14% of total government investments should have gone into agricultural development, this never occurred and agriculture remained greatly neglected. Thus, far from becoiriing a reasonable instrument for development, the plan was subverted into nothing more than a propagandist effort to raise popular enthusiasm and to encourage greater effort. The social structure and cultural climate caused even this last limited purpose to fail. In 1966, the military government, in proclaiming the abolition of the plan, merely stated a fait accompli.The new approach, adopted after the abolition of the Seven-Year Development Plan, was no longer committed to the "construction of a socialist society", and must therefore be judged as a directed effort to achieve economic recovery. With the assistance of the World Bank, Dr. Koopman, head of the Harvard University Eco-

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nomic Advisory Team to the Ghanaian Government, was asked to evolve an interim Two-Year Plan to accompany the budget for the years 1968/69 and 1969/70. The aims of this plan were manifold. Firstly, it was to reveal the resources available to the budget; secondly, to give some guidance to the government regarding the limitations of social-economic policy; thirdly, to discover which projects were worth pursuing. The assignment was not to produce a real development plan which starts with a number of targets required to be reached within a given period, but rather the reverse, i.e., to investigate each sector of the economy in order to discover its growth potential. For example, Dr. Koopman's forecast of increased agricultural production was based upon the growth of the rural population. It assumed that any effective steps taken by the Commissioner for Agriculture toward raising production could not produce a greater result than this until the end of a prolonged gestation period. Finally, after adding up the growth potentials of each sector, Dr. Koopman and his team reached their assumed overall rate of growth in physical terms. This again included an assumed increase in world market prices for cocoa; if it materialises, and taking into account terms of trade, this will account for a higher national income. The main objective of the Harvard group was thus initially not the plan itself, but rather to help the government to rally after the disasters of the Nkrumah period. Perhaps most important was the fact that the team involved as many Ghanaians as possible in the exercise in order to train them in formulating economic plans, particularly in preparing the "rolling plan" envisaged for the future. The same approach was adopted regarding the implementation of plans for which the whole planning machinery of the Harvard group is now employed. The fact that the Ministry of Economic Affairs, with which the team works most closely, has to report to the Executive Council of the State every four months, gives the team a lever with which to bring other ministries in line with general planning requirements. Another lever for a similar purpose is the control exercised by the Ministry of Economic Affairs over the development budget. Thus, the team is primarily engaged in building-up the necessary machinery for formulating and implementing plans, machinery which the country lacked during the previous planning period. Finally, the team is laying the foundations for the rolling plan by teaching its planning system methodology.

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The World Bank has given but little help in building-up a planning system in Ghana; if one wished to be unkind, it could be said that some I.M.F. efforts have been outright damaging. Dr. Koopman's team has taken various steps to ensure better communications between the planners and the people on whom implementation must depend. In various regions of the country committees were set up to assist the central planners. These committees were to put forward suggestions and lists of priorities for consideration; if these were accepted by the central planners, they were also to supervise implementation. Unfortunately, the composition of these committees once again reflects the old social structure, and their priorities are not really optimal for the country's development. The committees are dominated by police or military officers who usually hold the chair in their capacity of regional administrators, by church officials, bankers etc., but with almost no representation of farmers, fishermen, workers or traders. The central planners are unable to rectify the situation because lack of organisation and political experience prevents fishermen, market women, farmers etc. from adequately representing their own interests. Their voices are not heard and consequently their interests not represented. It is therefore dubious whether the new approach will do any better than the others in the implementation stage when much depends on such people. Too much depends upon the ability of the team to judge the relevance of the committees' suggestions and to find avenues for implementing the most productive, to make this method of planning as successful as it ought to be. Four planning periods in the Gold Coast and Ghana can thus be distinguished. The first, in the 1920s, was one of colonial planning. Excess revenue was used for constructing infrastructural assets which served colonial interests and deliberately or incidentally laid the foundations for the newly emergent national economy. The second period, in the early fifties, was one of reformist planning, when surplus state revenue was again invested in infrastructural assets but now with a distinct bias towards welfare investments. The third period, in the mid-sixties, was the one of Nkrumahist socialist-comprehensive planning, when targets were set to be fulfilled by both private and public sectors, and industrialisation was emphasised and over-emphasised. The fourth and most recent period, is one which combines reformist welfare planning with a degree

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of centralised socialist planning. Once again, targets are set for the whole economy, but along less dogmatic lines than formerly. The most striking observation regarding all four planning periods, is that economic progress mainly occurred outside the planning system. The growth of cocoa production, the organisation of the cocoa boards and the great export boom in cocoa laid the foundations for Ghana's relative prosperity. Neither the infrastructural investments nor socialist planning had ever really promoted this sector. Road systems were not constructed with an eye to the requirements of cocoa producers, nor was much spent on feeder roads to assist the cocoa industry. All that was done came in the form of reduced interest rates etc. for cocoa growers, and this was apparently sufficient. Far from being assisted by the state, the cocoa sector was regarded by it rather as a cow to be milked; indeed, this sector has paid, is paying, and will continue to pay for most of the country's development. Most, if not all, the pre-Nkrumah development was financed out of cocoa earnings. Even the Seven-Year Development Plan did not depart from this procedure, although it took into account a much wider range of variables than all earlier plans. Here too, investment was made to hinge upon cocoa profits, and the demand for consumer goods was curtailed by skimming-off these profits to finance state investment. State investment, however, went mostly into infrastructure which grew in excess of immediate requirements. Hence, excess capacity was bought at the cost of consumers' demand which might have stimulated industrial production. The fact that in real terms the annual rate of per capita growth of the domestic product averaged about 1.3% from the 1920s to the 1950s, and that after the fifties i t fell to less than 1%, tells its own story. It shows that capacitycreating heavy investment need not necessarily be followed by a rise in production. At the same time, however, the fact that the period 1953 — 59 showed an exceptional growth in real terms and the subsequent period was one of stagnation, shows that the outstanding economic growth in the early fifties was mostly rooted in the mid-forties, cocoa trees needing about seven years to reach maturity. In other words, the growing demand for cocoa in the developed countries recovering from the war, coinciding as it did with the cocoa farmers' increased freedom to enjoy the fruits of their prosperity, must be regarded as a main contributing factor to the high rate of economic progress in Ghana during the early fif-

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ties. It is for this reason that the supposition that planned investment in infrastructure or in industrial capacity must in the long run, at all times and in all places be the best way to promote growth cannot be accepted as universally true. It seems more likely that a careful division of the National Product between the income allocated to infrastructural development and the income left to producers, whether cocoa farmers or others, as demand-forming income, is the essential factor to be taken into account in future planning. The advantages of raising consumers' demand must always be carefully weighed against the future value of infrastructural development. This may well be the most important neglected aspect of present-day planning. Dr. Nkrumah's policy had always been to make the private sector subservient to the government's, even to the point of eliminating the former altogether. A new policy may well reverse this order. It may make the government sector subservient to the interests of the private sector insofar as this does not run contrary to basic welfare assumptions. Future planners may question farmers and manufacturers about bottlenecks in their capacity to produce more in order that each hindrance may be assessed in relation to the overall requirements of economic progress. Some of these difficulties may then be surmounted with the aid of state funds. In other words, the government should take directional responsibility. Each request for government support should be investigated in the light of three criteria. Firstly, by the criterion of feasibility and cost accounting, that is, whether the investment is reasonable and likely to yield profits; secondly, by the criterion of conformity with the general needs of the national economy, that is, from the point of view of long-term development; and thirdly, by the welfare criterion, that is, whether or not more equity is likely to result. It is true that such reformist procedures cannot suffice to extricate a country from its state of economic underdevelopment within any short period of time; if possible, they should be supplemented by additional and farreaching structural plans making for more diversification. However, these plans can only be additional and cannot replace the former procedure. Dr. Nkrumah's approach was always dominated by the criterion of maximum rather than optimum state planning and investment. What is proposed here is very different. Dogmatic criteria should never be applied to long-term state investment which ought to

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fill the gap if private capital is unable or unwilling to take the risk but the need of the investment is evident from the national viewpoint. Needless t o say, the 'private sector' signifies the national private sector and not foreign investors. The latter should be encouraged only when national capital cannot fulfil the task and the government decides t h a t it is really in the best interests of development. I n sum, the government should categorise investment requirements for long-term development perspectives to which both national and foreign investors can be invited to contribute. Planning would thus assume a dual character. I t would be concerned with short-term objectives: the elimination of bottlenecks, the provision of easy credit, or the construction of storage facilities, feeder roads and other means by which to promote the individual or collective economic performance of small producers. I t would also be concerned with major investment requirements of a long-term nature for changing the whole structure and capacity of the economy; such investments would not adhere to a rigid timetable but would be taken up whenever a suitable opportunity arises.

C. CONCLUDING REMARKS

There is no glib or simple answer to the question of whether or not foreign aid is desirable. Foreign aid is an instrument and therefore neutral; like most other instruments, its use can be both constructive and destructive. Syringes or nuclear plans are neither good nor bad in themselves: all depends upon the people who utilise them. I n the hands of a qualified physician the syringe is put t o one use; in the hands of a heroin-pusher, another. I n the hands of lunatics, atomic power becomes a menace to mankind; in the hands of reasonable people it may help to reduce poverty and its attendant ills. The value of foreign aid as an instrument of economic development can seldom be assessed in the abstract but has to be related to concrete situations, taking into account at least four of its inherent aspects. Two of these are related to the donor country or countries, and two to the receivers. Although none of these aspects can be entirely isolated from the others, it may still be possible to use'the mathematician's technique of holding some constant in order to examine others. I n the donor countries, aid may be 15 v_B3

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governed by self-interest and/or by a deep feeling of responsibility for less fortunate mankind. In the aid-receiving countries it may serve to enrich a parasitic group of the population without improving the living standards of the rest of the people, or it may serve the people as a whole, or at least the majority, to reach a higher living standard. In addition, it must be borne in mind that the motives for which aid is given may frequently be distorted and yield unexpected and even undesirable results. This may happen, for example, if self-interest dominated aid is given in a form ill-adapted to its purpose. Moreover, there may be differences of opinion regarding the definition of self-interest and the means which serve it best. The complexity of this problem is such that even self-interest motivated aid may prove to defeat its ends. Far from serving the self-interest of the donors, it may indeed harm them. There may also be a contradiction between the donor's short and long term self-interests. Self-interest in the short run may lead him to support a given government which has little hope of remaining in power in the long run. But the very support of such a government and its policies may automatically alienate the opposition which, in the long run, may have much greater chances for survival; in effect, therefore, the opposition may be the better choice for support in the cause of the donor's self-interest. At the same time, support of opposition forces, whether directly or indirectly, will alienate the present rulers of the aid-receiving country and thereby harm the more immediate interests of the self-seeking donors. The same complexity exists in the case of aid given for strictly humanitarian motives, which may defeat its own purpose by falling into the wrong hands. This may create an even greater problem than formerly existed. Furthermore, aid may be given in forms which by yielding some immediate relief, frustrate long-term developmental possibilities. For example, food aid given on individual occasions of famine may be justified both morally and economically, but food aid which takes the place of price incentives to the peasants to produce more efficiently, again defeats its own and the donor's ends. Altogether, it is obvious that aid is neither given nor received in a vacuum. Every country whether developed or not, has its social structure which is closely related to its economic reality and is bound to influence and be influenced by the gift and receipt of aid in a way which has a specific class content. Without full account being taken of this fact, at both the giving and receiv-

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ing ends of the process, the dangers involved in foreign aid may well be greater than those involved in its absence. The simplistic view, i.e. that given sufficient quantities capital aid is bound to have a positive effect on a society, cannot be really substantiated. It has been said that development economics is mainly concerned with three problems: (a) the problem of efficiency, i.e. of how to optimise the use of available resources; (b) the problem of equity, i.e. the question of how the nation's wealth can best be distributed; and (c) the problem of stability, i.e. how the transition from a materially poorer to a materially richer state can take place without too many of the wellknown shocks such as unemployment. However, the point which has been too frequently ignored is that these constituent elements of development economics: efficiency, equity and stability, cannot be separated and are so strongly dependent on each other that the pursuit of any one of them cannot really promote the welfare of society. The assumption that efficiency can be achieved for the benefit of the people without a growing degree of distribution, i.e. equity, is to say the least, incorrect. There is no such thing as an automatic wealth-distributing mechanism. The idea that the enrichment of a few automatically sets in motion a process by which part of their extra income will cause a rise in the incomes of others in the community via a multiplier effect, has never been conclusively substantiated by the facts as far as underdeveloped countries are concerned. Moreover, the impact of very modern methods of production make such a redistribution of wealth in underdeveloped countries even less likely in the future. As long as industry was less highly mechanised and labour was only gradually replaced by machines, there was perhaps some justification for the assumption that capital increases would lead to new incomes. This is no longer the case. Modern industry has long since outgrown the piecemeal substitution of labour. The savings arising from utilisation of capital as compared with labour have become so enormous that it is everywhere rapidly replacing all but the most highly skilled labour. Many industries which thirty years ago employed hundreds of workers and may then have derived a relative advantage from the low wages in poor countries, have been replaced by a new kind of industry employing very few workers of great skill and learning, in which machines do almost all the work previously performed manually As a result, the unskilled labour available in underdeveloped countries has become

15*

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less and less required by industry, and high-wage foreign experts are brought in from the developed countries whenever necessary. Unfortunately, few industries can be competitive unless they are modern; two completely separated sectors have therefore come into existence in the economies of some underdeveloped countries. The one is highly capitalised, and often partly or wholly foreign; the other, backward and of the people who, but for subsistence production, may well be doomed to eternal poverty. There is no need to cite examples from the oil-producing countries to illustrate this fact. Even countries which have recently shown a relatively high rate of growth in terms of physical output, such as Pakistan, can serve as examples to show the limitations on growth which absence of equity imposes on an economy, and the fact that growing output need not necessarily result in higher living standards for the people. The observation that early British economic development was connected with the concentration of capital without concern for distribution and indeed at the expense of the masses of English people, and that the distributory mechanism developed only later when producers required increasingly more labour, proves nothing. In the first place, the state of technology has changed beyond comparison and affects labour requirements quite differently; in the second place, the distributory mechanism which provided the multiplier effect was not granted by a dem ex machina from above to the British working class, but was taken and made effective through the organisation of the workers from below. In contrast, present-day technology makes investors less and less dependent upon the labour of the poor; consequently, the ability of workers or potential workers in underdeveloped countries to increase their share of the product, to enforce distribution, is becoming less and less effective. The requirements of modern industrial production no longer necessitate the concentration of many workers under one roof, and therefore no longer provide workers with the physical proximity which enables them to organise resistance to exploitation. This not only reduces their own ability to raise their income, but also prevents investors from finding a national market for their products. In short, it makes nonsense of the notion that capital increments alone can stimulate the multiplier as an instrument of development. The simple truth is that without a growing need for labour, and without labour's ability to organise in defence of its

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own interests, a mechanism to t u r n all aid into developmental assets does not exist. The simplistic solution to t h e problem of development, of injecting capital aid, therefore cannot be given unqualified approval. Nor can the alternative solution of the demonstration effect, according to which the purchasing power of the people is supposed t o be the key to demand-stimulated local production, be verified. This too is associated with a great variety of social and political developments which cannot ensure t h a t an artificially stimulated demand boom will automatically give rise to greater production or, indeed, to the growth of industry in an open economy. More likely than not, a demand boom will cause inflation, the opposite of stability, and an import boom. This is what actually happens in a number of countries, for example in those where American troops are stationed. I n the past, the conditions which made the multiplier the effective instrument of spreading prosperity in Europe were always associated with profound social changes. Sometimes these changes took hundreds of years to mature. I n the process, paternalistic, clannish or familial societies which were organised along vertical patterns of affiliation, became class societies in which affiliations are between similar income groups and therefore on a horizontal pattern. I n this newly emerging structure of society, it was the struggle of the lower strata against their masters which, step by step, provided the increasing participation of the masses in the fruits of the new technology. Thus, social change accompanied the progress of technology, and neither of them found the other totally unprepared. The factory system brought workers together, giving them t h e means with which to demand a greater share of production. I n turn, their greater share in the fruits of production gave them the higher living standard which was the prerequisite for even better modes of production and, at t h a t same time, forced employers t o improve their equipment. I t also gave the workers the opportunity to educate their children t o a level which made it possible for them to enter industry at a more developed stage of specialisation, and to enter political activity more effectively. However, this has not happened in the underdeveloped countries. There has been no intermediate stage in the process of industrialisation to ameliorate the transition from craftsmanship to high mechanisation. The workers could neither technically nor institutionally adapt themselves to the new requirements. I n fact, a predomi-

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nantly vertically-organised, hierarchical society was suddenly confronted with a technology evolved by a horizontally-organised society. There was none of the tug-of-war between capital and labour which had accompanied the evolution of capitalist societies in the developed nations and was the motive power behind their economic progress; there was none of the inexorable force which drove capitalist society to improve its efficiency and distribution. Yet these discrepancies make it possible for the social, economic and political processes which took place in the developed "western" world to be repeated in the underdeveloped areas. Neither can we really hope for a repetition of the development process which took place under Lenin and Stalin in the Soviet Union. Conditions in pre-revolutionary Russia were different to those prevalent in present-day underdeveloped countries, not only with regard to the state of technology, but also the whole cultural framework. 1 A solution sometimes suggested to help underdeveloped countries overcome the technological gap is heavy investment in education. The assumption is that if sufficient effort is directed towards education, a technological elite could be brought into existence which would jump the antiquated stage of labour-intensive industrial production and enter directly into the era of high specialisation. Like the approaches mentioned earlier, the educational approach has sufficient elements of rationality to commend it to many experts; unfortunately, it is hardly practicable in reality. It totally ignores the fact that learning can never be separated from the cultural environment. The educational background in West Africa today makes the learning process very difficult indeed for the young African and, in many cases, perhaps wholly ineffective. Even more important, however, is that learning everywhere is subjected to a value system; in the specific case of West Africa, this directs education into avenues which do not suit industrial requirements. The legacy of the colonial education system and, to a lesser extent, the legacy of the mission schools, left the people of West Africa with a distinct bias towards the humanities rather than science. In other words, they put a premium on those educational values which cannot directly promote economic growth. Thus the education system is both a cause and a result of 1

For details see the present author's discussion of the Industrialisation of Russia in A Short History of Economic Progress (London, 1969) and Theories of Economic Development and Growth (London, 1966).

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economic backwardness. As long as the best remunerated employment for the educated continues to be confined to office work, it is unlikely t h a t this situation will be substantially altered. At the same time, of course, as long as industry is hindered in its development by the absence of a technically educated labour force, there is little hope t h a t it will grow sufficiently to provide the necessary incentive for the young and ambitious to acquire the new technical skills and scientific knowledge. The masses of un- or underemployed literate and semi-literate proletarians in the cities of many underdeveloped countries give impressive evidence of the failure of current education policies. Again, the contradictory nature of foreign aid is evident. I n theory, aid to education can produce a skilled labour force of the required technological standard, but in reality it need not do so. I t may merely help to inflate the numbers of unproductive literates who are incapable of helping the economy, but can and do create a great deal of political instability. Whatever the result of the aid does not depend only upon the social structure and cultural framework of the aid-receiving country; it also depends upon t h a t count r y ' s political direction and upon the aid-distributing agencies of the donor countries. I n other words, unless the donor authority is able to dictate the direction of the aid, making sure t h a t it is employed for specifically chosen purposes of technical education, the receiving country may divert it to conform to the traditional scheme of social preferences. This is what happened at the University College of Cape Coast in Ghana, for example. Cape Coast University received UNESCO funds for the specific purpose of producing science teachers. This objective was accepted and supported by the Ghanaian Head of State, Dr. Nkrumah. However, the Principal of the University, a man from the town in which the University was situated and a well-respected member of the community, subverted this purpose by persistently emphasising the humanities, because this was not only more in tune with his own conception of education but also with t h a t of the community. I n this he was supported by many of the staff, both Ghanaian and expatriate, and by the majority of the students. Eventually, after unsuccessfully attempting t o put pressure on the Principal t o change this practice, the Government dismissed him. A more "trustworthy" principal was appointed in his place who, being a foreigner, was less committed to local pressures and traditions; he owed personal loy-

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alty to the head of state, and was himself a scientist. Yet he too, was unable to remedy the situation. To be sure, there was a greater intake of science students but in addition to art students and not in their place. More lip-service was paid to the importance of science, but the reality remained unaltered. Experience has thus shown t h a t social pressures can easily frust r a t e schemes for the production of more scientists, even where national political leadership supports them and foreign agencies provide the funds. I n fact, the problem is complicated even further by the difficulties connected with the quality of science teaching even where directives are followed. Whereas, from a formalistic point of view, art subjects are nofc too badly taught in many West African universities, this cannot be said of science subjects. One reason is t h a t it is almost impossible to find suitably qualified and motivated science teaching staff. With premiums being paid for good scientists by industries in developed nations, it is understandable t h a t few are prepared t o teach in the underdeveloped lands for smaller salaries and, perhaps more important, few research facilities. For the same reasons, it is almost impossible to retain the few good scientists of West African origin. Taken together then, tremendous difficulties are involved in making foreign aid give rise to a multiplier effect, or in using it to provide a new kind of education with which to narrow t h e technological gap. To be really useful, aid must always be given in a form which simultaneously fulfils both requirements of efficiency and equity, in a way which is not too far removed from the traditional patterns of society. However, this combination of efficiency and equity is often unacceptable t o the receiving country's ruling hierarchy, and may subject t h e donors t o false accusations of colonialism. For this reason, aid will always have an obvious political content. Aid without due safeguards for the promotion of equity can no longer produce real economic progress even indirectly, whereas aid with such safeguards will always be resented by parasitic ruling classes. Similarly, aid without sufficient consideration for the local cultural framework is bound to be subverted into unexpected and usually undesirable avenues. The sad fact t h a t almost all governments of underdeveloped countries consciously or unconsciously are prisoners of their parasitic social elites, renders all government-to-government aid, whether motivated by humanitarian or other reasons, almost entirely

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ineffective. No-one who has not lived in an underdeveloped country for a considerable period and become closely acquainted with the literate elite, can even begin to imagine the ruthlessness with which they exploit their people or the contempt in which they hold them. No-one who has not been directly involved in, or subjected to, the greedy quest for power by the elite can grasp the true meaning of their political hegemony. No-one who has not been able to watch them closely can picture the shortsightedness of their greed and their almost religious devotion to killing the geese that lay the golden eggs. The elite have completely denuded themselves of their traditional value systems and their moral restraints without adopting even that minimum of European capitalist morality which, inadequate as it is, still puts at least some semblance of restraint on the European exploiters' unbounded quest for money and power. The elite's contempt for the illiterate masses is nowhere mixed with that kind of moral discomfort which, hypocritical though it is, restrains European capitalism from reaching the same self-destructive level. Whether this cultural position of the elite of underdeveloped countries is due to their colonial heritage or their specific circumstances or whether it is the consequence of something else, need not be discussed here. However, the reality of the situation must be recognised as it has considerable bearing upon the prospects of economic development and upon the direction foreign aid should take. It must be quite clear that these groups dominate most governments of underdeveloped countries and use aid in ways which cannot promote the economic welfare of the people. Their deep-felt contempt for the illiterates gives to any national slogan of development a specifically class-oriented content. In other words, to their minds national development is little more than their own narrow interests, and even worse, immediate enrichment. As there is no effective mass demand, their accumulation of wealth never becomes industrial investment to indirectly promote economic progress, but remains conspicuous consumption. As the elite are too limited in numbers to stimulate the development even of an industry for such goods, they turn to imports, and thereby close the circle by which foreign aid returns to its country of origin. Objectively, government-to-government aid largely becomes a means by which to support a parasitical group of people in the underdeveloped countries which import parasitical consumption goods from

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the developed nations. In other words, government-to-government aid is in many cases the transfer, via the medium of taxation, of part of the developed people's incomes into the hands of small elite groups in the underdeveloped countries; these return it to the capitalists in the developed nations in exchange for such goods as no longer have an expanding market there. More concisely, government-to-government development aid enables the better exploitation of people in the developed country by some members of their own industrial elite. It is in this sense that motivation in the donor countries makes little difference to the actual consequences of aid-giving. Whether the donors are directly interested in such aid for their own advantage, as are some exporters and export-manufacturing firms, or whether the motive is one of true concern for the people of underdeveloped countries, the result will be the same. In either case it will be of scant help to the majority of the people in the receiving country for whom it is intended. Yet any other kind of aid, by-passing the governments of underdeveloped nations or with specific progressive conditions attached, cannot easily be implemented. Both these possibilities which could make aid effective in spite of the impediments mentioned earlier, would involve the donor countries in many political complications, made particularly severe by the fact that most of them still suffer from the psychological residue of their colonial past. This legacy not only prevents them from examining the true nature of their aid, but makes them totally incapable of interfering even progressively in the affairs of developing countries. In fact, it leads them into a position from which only true colonialists or neo-colonialists can derive advantage, while the anti-colonialist and de-colonising forces are constantly put under the shadow of suspicion. Only when the true class nature of the societies in underdeveloped countries is recognised, and when donor nations cease to be fearful of false accusations of colonialism, can foreign aid, even on a government-to-government basis, perform a useful task. On the basis of these observations, only two kinds of foreign aid are recommendable. Firstly, foreign-directed price support; that is, the establishment of funds to be administered by donor countries or international organisations, for the specific purpose of supporting and stabilising the prices of locally producible goods in underdeveloped parts of the world. This support may take the

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form of banking funds to supply cheap credit t o farmers or manufacturers on the criteria of cost accounting and desirability of the line of production, or of funds to be used for setting-up purchasing stations for finished products in order to stabilise demand. Both forms may also supplement each other. The crucial point is t h a t administration of the aid should not be left in the hands of the present ruling classes and should be always open to public inspection. This is absolutely necessary to prevent it from being used for parasitical consumption. I n addition, donors should provide such infrastructural investments as they deem necessary t o support more farreaching development requirements. Usually, such infrastructural investments should come in response t o immediate needs, to eliminate bottlenecks. They may also come in advance of needs but only after very careful analysis of the practical prospects of making full use of their capacity in the reasonably near future. If receiving countries reject such foreign intervention, it may well be better for the development of the countries concerned not t o give any aid at all. The nature of colonialism has always been one of exploitation, such developmental tasks as were performed being usually by-products of the objectives of exploitation. Aid, which does not exploit but is developmental, can therefore never be truly termed colonialist intervention. I n spite of the hue and cry which will undoubtedly be raised by the ruling classes of underdeveloped countries against "directed aid", this fact should be absolutely clear to all concerned. Furthermore, aid should be given with a deliberate bias towards promoting progressive organisational frameworks within the aidreceiving populations. A clear preference should be shown towards receivers of aid who can and will make collective rather t h a n individual efforts, because the future depends upon the ability of productive people in underdeveloped countries to organise effectively: whether the old regime is t o be overthrown and replaced by a representative leadership, or whether the productive people will continue to be ruled and exploited by their administrative class of consumers who prevent national development. The process of true decolonisation in the ex-colonial countries will begin only when political leadership falls into the hands of the productive population; until then colonialism will have changed only its carriers, not its substance. Only then will the time be ripe for government-to-government aid t o t u r n from being a restraint

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upon development into a constructive force. Putting this idea differently, as long as political factors are inseparably interwoven with economic factors, aid donors, far from shunning political involvement, should become parties t o the political regeneration of ex-colonial countries; they should promote de-colonisation by supporting the anti-colonial, productive forces in their struggle against the neo-colonial ruling class. I t is crucial to remember t h a t colonial reality has not really been eliminated with the withdrawal from parts of Africa and Asia of the political official hegemony of the colonising countries. All t h a t has actually taken place has been the substitution by one power of others, an organisational change in the mechanism of colonial exploitation. The duties previously performed by an obvious and obnoxious foreign leadership, easily distinguishable by colour or language and against whom it was relatively easy to organise national opposition, have been taken over in a new form by a local leadership which, in fact though not in appearance, is as exploitative as t h e foreigners. The fact t h a t the objectives of colonialism have changed in recent decades, and t h a t colonialist exploitation has diminished for reasons which have to do with economic and military developments in Europe and North America, has made them less obvious but not less real. I t is for this reason t h a t the withdrawal of foreign colonialist administrators has only started the decolonisation process, but not completed it as so many want to believe. The process will only come t o its end when the new kind of colonialism, reflected in the bond which ties by their narrow interests the most reactionary forces in the developed nations to those of the underdeveloped countries, has been destroyed. This can only happen through the rise t o political power of a new social stratum which exists by the fruits of its labour, and not by the exploitation of others with the aid of foreign partners. Constructive development aid is politically revolutionary by its very nature, and for this reason can never escape t h e risk of attack in either developed or underdeveloped countries. I n the underdeveloped world its enemies are the ruling elites; in the developed world, the bankers, exporters and industrialists who defend their direct economic interests and, unfortunately, also t h e liberals who have not yet awoken t o the difference between anticolonial phraseology and reality. The second kind of development aid which should be encouraged (if the word "aid" is really applicable) is t h a t which comes in t h e

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form of open and honest private enterprise. Any private investor who wishes to open an industrial establishment in an underdeveloped country should be welcomed, provided t h a t his interests do not run contrary t o those of the people. There is nothing wrong with Kayser of America constructing a dam on the Yolta River to produce the hydro-electric power which the Kayser Company requires for its own aluminium works. In this case, there may be no contradiction between the needs of the Ghanaian people and those of the Kayser Company.The problem seldom arises when the government of the underdeveloped country is representative of its people. I t does arise when the government serves a small exploiting elite. The power of such investors then becomes so great t h a t it may create an imbalance between the benefit derived from the enterprise by the people and t h a t accruing to the foreign owners of t h e company. Again, the degree of advantage or disadvantage of private foreign investment depends upon the political structure of t h e receiving country. If the working population is sufficiently organised and is conscious of its economic interests, this kind of investment will be of great advantage; "if the people are led by a parasitic leadership, perhaps hiding under the cover of patriotic slogans, it will not. By itself there is no necessary contradiction between advantage t o foreign investors and national development of an underdeveloped country. Whether both sides will benefit or only the foreign investors always depends upon the political and social structure. The ability of the people of underdeveloped countries t o organise effectively in pursuit of their direct economic and sometimes political interests, has been well demonstrated by the cocoa marketing organisation and by the popular movement which supported Dr. Nkrumah's initial rise to power in Ghana. Once foreign aid stops supporting the present ruling elites and starts backing the efforts of the working people, these organisational abilities may well come to life once again and lay the foundations for a constructive spurt of social, economic and political development. The crucial battle for revitalisation of the de-colonisation and development process in the underdeveloped countries, therefore, may well have t o be fought in the developed nations. Much may depend upon the ability of progressive people in Europe and North America t o denude development aid of its reactionary characteristics and clad it in new progressive robes. Apart from the fear of accusations of

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colonialism, the vested interests of certain leading industrial groups and the mediocre nature of bureaucracy, differences in the motivation and public image of foreign assistance will have to be overcome. To illustrate the latter point, we may compare the attitude of the public in Holland with t h a t in West Germany t o the phenomenon of foreign aid. The Dutch people have accepted the need for development aid and feel it as a Christian or humanitarian duty. They therefore part fairly willingly with one per cent of their national income in the hope of helping their fellow human beings. The problem here is of demonstrating the need t o route the aid into progressive channels. I n Germany, the public is not ready to give a share of its national income merely t o assist what it often considers to be "foreign lay-abouts" or even competitors. A great many older Germans are so deeply immersed in an orgy of self-satisfaction with their post-war achievements, claiming t h a t only their hard work and effort have made them rich, t h a t they are totally impervious t o the true issues involved in development aid. To be sure, they have no immediate legacy of colonialism to prick their conscience. I n Germany, the problem of foreign aid is therefore more complicated t h a n in Holland or Britain; the German people's consciousness of responsibility must be augmented, and also their recognition of the future dangers involved in failing to aid the developing countries. In a way, however, the aid problem may also be easier in Germany t h a n in Holland. If aid is given for self-interested motives, it may well be easier to show t h a t Germany's national self-interest will be better served by progressive development aid than it is in the present situation. The fact t h a t enormous quantities of American money could not support a South Vietnamese government and did not enable it to win the support of the majority of the Vietnamese people, shows the political ineffectiveness of supporting reactionary governments. I t demonstrates t h a t the interested developed country becomes ever more expensively involved and makes an unnecessary enemy of the side which will eventually win. On the other hand, by supporting progressive groups against reactionary leadership, strong and lasting friendships may be made. I t is an old established t r u t h t h a t real friends cannot be bought for money. A real friend, like confidence, has t o be won. This remains true even if the friendship is counted for t h e pursuit of self-interest.

POSTSCRIPT

Each situation and period has its own particular problems requiring specific solutions. For this reason, there can be no general conclusions to this book beyond those so often stated, such as the need for savings and investment, for efficient credit facilities and price stability, for land reform and education, for water management, the supply of fertilisers, pesticides, new plant and seed varieties, etc. All t h a t can be added is a word of warning to the development economist always to examine carefully the specific reality of each situation before reaching for his wellknown economic models, t o think and use his commonsense, and in his recommendations t o strike an intelligent balance between the possible and the desirable. Indeed, he should resemble the physician in never prescribing a remedy without first thoroughly examining the patient. The development economist should learn to understand the attitudes and value systems of the people he wishes to help; this will assist him t o select the projects which will cause the least social and cultural resistance and will gain the greatest degree of popular support. H e should always remember the quasi-class content of each development project, and make sure of the organised social and political support of all those directly interested in its success. Above all, he should never underrate the intelligence of uneducated people; he should recruit their support in trying t o achieve desirable ends rather t h a n use economic instruments of coercion which rarely attain positive results. The apparent contradiction between the simultaneous achievement of economic growth, an equitable distribution of wealth and a high degree of stability is merely the result of political machinations. There is no objective economic reason why a government should not choose an economic growth rate which allows its people t o participate equitably in the increasing fruits of production, or 16 v—93

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one which would reduce economic fluctuations to a minimum. The reasons for not doing so sometimes include ignorance, but are more commonly political. Each government represents a stratum of society or an interest group, and this fact is consciously or unconsciously reflected in its economic policies. The economic policies of those governments which represent landowners, traders and bankers have easily discernible sociopolitical implications, being firstly concerned with growth, especially of exports, and secondly with stability, particularly of prices. Very little attention is paid to the equitable distribution of wealth; more often than not, this is left "to solve itself" in the wake of growth and stability. Governments of this type usually have strong links with foreign interests, and are little likely to effect economic improvements of benefit to the entire population. The socio-political implications of economic policies are somewhat more complex when governments represent the new elites — the literates, civil servants and the military. These governments are also primarily concerned with growth, but feel obliged to pay at least some attention to the redistribution of wealth. Unfortunately, the leaders of such governments are seldom well-equipped for such a task. With few exceptions they are products of European attempts to manufacture a native elite and have little true compassion for their peoples. In the words of Jean-Paul Sartre, they are the promising adolescents "picked out by the European elite, who branded them . . . with the principles of western culture; . . . stuffed their mouths full with high-sounding phrases, grand glutinous words that stuck to the teeth, and after a short stay in the mother country sent them home, white-washed", walking lies who had nothing to say to their brothers.1 Sartre speaks of the hegemony of these people as though it were a thing of the past, but alas it is still with us. Not only mentally are such rulers ill-equipped for the promotion of economic growth and social justice. Economically, they represent a stratum of society that makes little material contribution. They represent neither employers nor the employees who produce tangible goods, but merely a service sector which depends upon polit-

1 Jean-Paul Sartre. Preface to Frantz Fanon, The Wretched of the Earth (Harmondsworth, Penguin 1967), p. 7.

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ical hegemony for its income. Tradition forces them t o inflate their ranks and the necessity to assuage the townspeople forces them to "skin" rather t h a n "shear" all those engaged in productive labour. Their growing needs prevent them from saving and investing in productive developmental enterprises, while their rapacious taxation of those engaged in production deprives the latter of the will and ability to do so. I n time, such rulers become increasingly dependent upon foreign support. Talk about the state being an independent variable for promoting economic progress becomes a thin disguise for a return t o the old colonial relationships. Thus, forces beyond the control of even the best of leaders transform taxation designed for the finance of development plans into sources of income for a growing services sector. Development plans become little more than investment policies designed to create employment for the growing number of unskilled urban workers, with no real regard for profitability criteria. Price policies designed t o reinforce development programmes become a necessary element of the rulers' political stability, i.e. a means with which to provide the towns with cheap food. The farmers, representing nearly two-thirds of the population, are not only deprived of income which might give them the incentive and opportunity to improve inputs, but also of the chance t o buy goods produced by an industrial sector. Governments of the new elites, with little hope of breaking competitively into international industrial markets, are forced perhaps against their will to deprive themselves even of the effective local demand which could stimulate industrial production. I t may be true that decolonisation, the prerequisite for economic development, has so far touched only some formal and external aspects of the colonial heritage and has left the real internal aspects untouched. The movement against colonialism has won some wars of independence, but has not made a revolution. I t has left t h e reality of exploitation in the underdeveloped countries as it was, although here and there substituting the persons of the exploiters. The new exploiters, having rapidly adopted the cultural image of their predecessors and forced their brothers to acknowledge it, have deprived all but themselves of the right and opportunity t o speak for their peoples. This has enabled them to pass off their own personal enrichment as the economic development of their countries.

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The only way by which genuine economic development can be achieved therefore appears to be through the political organisation of all those productively employed, particularly the farmers, in defence against their own exploitation. Only when political representation reflects economic reality in the underdeveloped countries will it be possible to replace the statistical illusions of economic progress with real economic development. Only then can the necessary balance be struck between consumption and investment, because only then will it be in the interest of all to share in the great effort required to raise a people's national product.

INDEX

Ability to produce, 34 Accra, 163 Accumulation of wealth, 16 Activities instrumental and ceremonial, 17 Adaptability, 66 Administration, 62, 75, 80, 143, 146, 163, 173, 176, 212, 213, 236 Political, 80 Administrations, 90, 146, 170 Administrative efficiency, 114 oligarchy, 180 Administrators, 27, 117, 119, 171 Africa, 62, 63, 58, 62, 106, 122, 128 East, 137, 138 South, 37, 52, 53, 115 West, 42, 61, 62, 63, 90 Africans, 17 African Unity, 154 Age distribution, 40 Agriculture and State control in Ghana, 201—204 relationship with industry 139— 149 Aid and equity, 232—233 Foreign, 96, 119, 123, 135—138, 147 Algeria, 46, 62, 65 wheat yields in, 26 America, 14, 37, 38, 74, 104, 164 Latin, 52, 53, 58, 106, 113, 122 North, 9, 13, 18, 25, 28, 47, 53, 54, 58, 59, 65, 95, 103, 122, 146, 236

South, 25, 62, 107, 113 Animals, 49 Apartheid, 17 Argentine, 37, 62, 66, 113, 124, 125, 126

Army, 118, 163 Ashanti, 158 Asia, 63, 58, 106 Asian USSR, 28 Atomic holocaust, 41 Atomic power, 225 Attitudes, 13, 28 Australia, 37, 68, 65, 122 Baker, V.W., 60 Balance of payments, 123 Bananas, 123, 158 Banks, 79, 95, 190, 191, 235 Raiffeisen, 82, 83 Barbarians, 36 Batista, 16 Bauxite, 155 Berlin, 34 Beryllium, 156 Beveridge, Lord, 32 Birmingham, W., 159, 184, 191 Birth control, 11, 12, 17 Black Death, 30, 31, 32, 33, 41 Black market, 142 Bloch, Marc, 76 Bolsheviks, 87 Borrowing, non institutional, 114 Boulding, Kenneth, 142 Brazil, 39, 52, 64, 66, 203 Brenner, Y.S., 67, 71, 87, 147 Brezhnev, L.I., 88 Bribes, 63,117, 165,171, 172,175,216

246

INDEX

Buddhist monks, 16 Bureaucracy, 177, 198, 201, 211, 212, 238 Bureaucratic insensitiveness, 16 Burma, 65 Bush clearing, 46 By-products, 10, 52, 141, 207 Cameroon, 128 Canada, 40, 47 Canals, 46, 50, 56 Capacity, excess of, 142, 183, 196 Capital, 26, 35, 41, 46, 56, 133, 135, 137, 142, 177 accumulation and concentration of —, 36, 132, 171, 181, 198, 204, 228 goods, 120 intensive, 40 labour saving, 26 land improving, 26 output ratio, 182 supply of, 42 Capitalism, 13, 14, 15, 16, 33 State, 198 Capitalist, 13, I 4 i , 174, 196, 200, 234 Capitalistic competition, 15 development, 14, 196 exploitation, 16 morality, 233 rationality, 17 society, 15, 197 virus, 14 Cash economy, 51, 112 Cassava, 158, 164 Castro, Fidel, 16, 117 Cattle, 62, 158 Central African Republic, 128 Centralisation of industry, 143, 146 Centrally planned economies, 199 — 299 Ceylon, 65, 95, 107, 108, 127 Chad, 128 Chaplin, Charley, 204 Children, 29, 41, 42 Chile, 64, 65, 127

China, Republic of, 16, 52, 143, 174 Christianity, 167 Citrus fruit, 158 Civil servants, 108, 116, 117, 118, 145, 146, 160, 161, 163, 165, 171, 172, 179, 213, 218, 242 Clapham, J . H . , 27 Clark, Cohn, 23, 26, 44 Class, 177 -pressures, 178 -structure, 104, 205, 217. 234 Climate, 56, 60 Cocoa, 62, 63, 91, 121, 122, 123, 158, 160, 166, 172, 173, 175, 203, 211 Coconuts, 123 Coffee, 91, 92, 121, 122, 123, 127, 158 Collective farming 86—90 , Colonial legacies, 12, 115, 119, 143, 144, 145, 160, 161, 163, 171, 174, 180, 181, 188, 211, 213, 215, 216, 220, 232, 233, 234, 235, 243 Colonialist, 117, 162, 178, 192, 200 Columbia, 64. 65, 125 Combine harvesters, 47 Communal property, 106 Communist, 118 Comparative advantages, Law of, 131, 132 costs, 203 Compensation to land owners, 111 Competition, 71 — 73, 101, 102, 110, 117, 129, 134, 155, 184, 191, 196, 203, 207, 223, 238 Foreign, 142, 147 Confidence, 77, 90 Constantinople, 33 Consumer goods, 144, 199 -industries, 137, 142 Contraception, 42 Coopeiation, 103, 215 Cooperatives, 55, 77—80, 95, 116, 218

Copra, 158 Corn, 62

INDEX

Corruption, 63, 80, 119, 143, 167, 171, 172, 173, 211 in Ghana, 212—214 Cost-benefit, 55 Cost of living index, 124 Cotton, 39, 44, 121, 123, 128 Cousins, Frank, 72 Cox Russell, J., 30 Craftsmanship, 51 Credits, 91, 113-116, 235, 241 Creighton, C., 32 Crops, cash 38, 48, 91, 162 202, sharing 59, Crusades 33, Criticism 143, 189, Cuba, 16, 65, 118, 174 Cultural changes, 41 environment, 13, 59, 230 factors, 33, 104, 166 heritage, 98 legacies in Ghana, 188—191 Currency, foreign, 117 Custom, 91 Customers, 37 Cyprus, 45, 124 Czechoslovakia, 42 Dahomey, 128 Dairy products, 122 Dams, 46, 50, 56, 128 Danqua, Dr., 211 Decision making, 13, 36, 53, 93, 143, 189 Decolonisation, 119, 235 — 237, 243 Deforestation, 47 Demand, 34, 45, 62, 91, 107, 120, 129, 132, 134, 144, 147, 148 effective or effectual, 34, 38, 42, 110, 120, 143, 196 elasticity of, 39 for food, 41, 42 Democratic development 188, 195 — 198, 241 Demons, 15 Demonstration effect, 229 Depreciation, 147

247

Devaluation, 133 Development Plans, 157, 183, 203, 219, 220, 243 Dialectics, 14 Diamonds, 155 Diesel, 144 Diminishing returns, 24, 25 Discipline, 79 Diseases, 28, 48, 49, 61, 62 Distribution equitable, 14, 148 system, 57, 59, 61, 63, 91 Djilas, 198 Dominican Republic, 127 Drainage of land, 26, 46, 52, 54 East, 36 Ecology, 64 Economic Laws, 13 needs, 18 progress as a result of population growth, 32 theory, 13, 16 Economies of scale, 9, 11, 147 Economy, cash and market, 25 Education, 10, 61, 62, 64, 98, 135, 140, 166, 167, 172, 180, 189, 204, 211, 214, 241 in Ghana, 160-163, 230-232 Efficiency, 10, 11, 35, 44, 83, 101, 102, 109, 130, 131, 137, 139, 141, 149, 196, 208, 227, 232 E g y p t and U.A.R., 55, 64, 65, 109, 118, 128, 183 ancient, 35, 45, 52 Electric motors, 144 Elites, 90, 100, 165, 230, 242, 243 Emigration, 41, 103 Empire, 35, 36 Energy, sources of, 10, 52 Engels, F., 72 England, 28, 36, 42, 47, 98 Enterprise, 35 Environment, 65 Equador, 125 Equipment agricultural, 26, 35, 37, 38, 39,

248

INDEX

47, 48, 63, 72, 90, 105, 133 labour saving, 38, 46, 47, 51, 54, 72, 104, 162 Equity, 129, 133, 148, 149, 227, 241 Establishment, ruling, 12, 179, 181 Ethiopia, 65 Europe, 9, 14, 18, 28, 31, 33, 36, 37, 38, 47, 53, 58, 63, 65, 74, 77, 95, 98, 135, 146, 205, 236 northern, 9, 32, 77 western, 13, 33, 53, 69, 65, 122, 200 Europeans, 17, 18, 36 Exchange, 34, 35, 36, 40, 43, 129, 140 Exchangeable manufactured commodities, 37 Exploitation, 140, 197, 233, 235, 243 Expertise, 48 Exports, 62, 94, 103, 117, 175, 209, 242 crops for, 126, 136 prices, 120 — 138 Extension work, 62 Fallow, 24, 57, 107, 159 Family, 15, 75 extended, 17, 77, 79, 106, 168, 169, 172, 201, 215, 217 large, 28, 42 ties, 90, 178, 214 Famine, 28 Fanon, F., 242 F.A.O., 19, 24, 25, 39, 46, 52, 53, 57, 58, 64, 65, 74, 92, 95, 109, 116, 120, 121, 128, 137, 138 Far East, 52, 122 Farmers committees, 108 Farming as a way of life, 74 practices, 36 subsistence, 25, 112 Fascism, 14, 72, 118 Fats, 121 Fear, 15, 16, 17, 198 Fertility human, 30, 31 of land, 24

Fertilisers, 26, 42, 52, 64, 55, 57—60, 64, 217, 241 Feudalism, 15, 76 Finance, 85 sources of, 185—186 Financial incentives, 96 Financing agricultural development, 71—97 Fluctuations, 134, 242 Food, 27, 37, 45, 120, 127, 141 aid, 117, 142 production, 39, 42, 120 surpluses, 12, 42 Foreign Aid, 96, 123, 135—138, 155, 163, 164, 176, 178, 182, 184, 189, 212, 231, 237 assistance, 142, 154, 164, 165, 175, 177, 188, 238 characteristics of, 191—195, 196, 215, 216 conclusions about, 225—238 investments in Ghana, 173—187 loans, 123, 185, 186 Foreign allies, 117 France, 98, 102 Free enterprise, 148 Freedom of the individual, 17, 43, 195 Gabon, 128 Gadgil, D.R., 144, 146, 146 Gain, the love of, 16 Germany, 36, 42, 98, 238 Ghana;, 24, 27, 42, 57, 58, 60, 63, 76, 86, 92, 93, 115, 118, 1 5 3 - 2 4 4 basic data, 153—156 agriculture in, 156—160 Ghosts, 15 Glass, D.V., 30 God, 166 acts of, 28 Gold mining, 155 Government sector, 144 Government sponsored agra-cooperation, 90—91 Governments, 116, 163 Government to government aid, 119, 178, 234

INDEX

Greed, 16, 211, 233 as economic incentive 16 Greece, 42 Griffith, G.D., 30 Groundnuts, 91, 123, 158 Guatemala, 39, 65 Guggisberg, 219 Guinea-corn, 158 Guyana, 126 Gypsies, 17 Hapgood, 56 Hegel, 16 Hiroshima, 18 Historical necessity, 9, 15 History, 33, 36, 66—69, 113, 197 of rural organisation, 76—77 of cooperatives in Europe, 80— 86 Hitler, 17 Honduras, 39, 65 Hope, 15 Horizontal ramifications, 9 Humanism, 197, 198 Humanities, 161, 230 Humanistic traditions, 17, 18 Hunger, 14 Hydro-electricity, 148, 220 Ideology, 14, 16, 167 I.D.E.P., 19 Illiteracy, 58, 233 Impediments -Institutional, 104—119 -to progress, 98 — 119 Implementation, 145 Imports, 122, 129 Incentives, 37, 38, 39, 40, 42, 47, 48, 56, 60, 62, 63, 74, 90, 96, 101, 105, 109, 110, 119, 243 Income, 74, 142, 147 distribution of, 129, 133, 134 per capita, 41 India, 12, 41, 42, 52, 62, 64, 65, 90, 107, 108, 124, 125, 127, 142, 143, 144 Indicative World Plan for Agricultural Development, 124, 137

249

Indonesia, 46, 65 Indulgences, 194 Industrial -equipment, 10 labour, 10 production, 9, 10, 35, 37 responsibility, 10 revolution, 35, 77 society, 10 underdevelopment, 11 Industrialisation, 171, 174 Industry, 9, 27, 38, 44, 50, 51, 53, 134, 154, 162, 169, 184, 196, 207 -and agriculture, 139 — 149 -and State control in Ghana, 204-209 manufacturing, 39 modern, 10, 40 Inefficiency, 169 Inflation, 111, 229 Infrastructure, 16, 91, 97, 130, 134, 142, 143, 144, 146, 147, 164, 184, 190, 195, 196 Initiative, 103, 104, 141, 143, 189 Inputs, 36, 38, 42, 55, 67, 68, 59, 105, 141 Institutions, 77, 98 Integration, industrial, 11, 206, 207 Intelligence, 16, 35, 178, 241 Intensification of agriculture, 37 Interests, 18, 34, 35, 72, 106, 242 International Bank for Reconstruction, 123 International Coffee Organisation, 123 International Monetary Fund, 130, 133, 222 Intimidation, 165, 172 Invention, 104, 141 Investments, 26, 29, 42, 43, 59, 72, 93, 97, 99, 102, 105, 109, 110, 112, 124, 126, 142, 144, 145, 181, 185, 202, 230, 241, 243 Iran, 52, 65, 109 Iraq, 46, 65, 113, 126 Irrigation, 60, 55, 56, 115, 219 Israel, 52, 86, 89, 128, 164, 181, 197, 205

250

INDEX

J a p a n , 9, 42, 59, 95, 96, 109, 111, 116, 122, 123, 146, 205 Jews, 17 Jones, E.L., 67, 68 J u t e , 121 Keynes, M., 181 Kibbuzim, 16, 89 Koch, 30 Koopman, Dr, 220, 221, 222 Korea North, 125, 127 Republic of, 39, 95, 126 South, 127 Krushchev, N., 89, 201 Labour, 35, 38, 41, 115 African, 17 Concentration of, 15, 72, 73, 198 discipline, 77 division of, 9 -force, 37, 39, 40, 45, 103, 217 organised, 13, 72, 118 productivity of, 24, 38, 40, 42, 45 shortage of, 38, 46, 47, 48, 50 skilled, 41, 133, 142, 147, 205 surplus of, 24, 46, 47 unskilled, 9, 10, 132, 133, 169, 227, 243 Lactation, 31 Land, 35 exploitation, 32 improvement, 37 intensive use of, 38 ownership and social status, 98-101 productivity per acre of, 42 Reform, 107, 109-112, 241 shortage of, 38, 107 surplus of, 53 tenure, 47, 59, 75, 98, 104—108 utilisation of, 24, 38 Landlords and landowners, 105, 106, 108, 111, 112, 114, 117, 202, 242 absentee, 112

Latifundia, 106 Learning, 29 Legal impediments t o progress, 47, 104-119 obligations, 99, 112 Legislation, 105, 108 Lenin, 16, 197, 199, 230 Leningrad, 34 Libya, 39, 45, 65 Linkages, industrial, 10 Lip-service, 128, 166, 232 Literacy, 57, 80, 161, 166, 167, 180, 233 Living standards, 28, 39, 40, 41, 45, 54, 61, 70, 73, 143, 172, 174 Loans, 96 London, 34 Machines, 52, 73, 93, 141, 148, 199, 217 Madagascar, 126 Maintenance of equipment, 92, 147 Maize, 44, 60, 63, 158, 164 Malthus, 23, 25, 26, 27, 28, 29, 33, 34, 36, 184 Neo-Malthuaian solutions, 11, 42 Mammon, the God, 17 Management, 59, 92 Manganese, 155 Manufactures, 38, 45, 101, 139, 169 Manure, 49, 57 Marcuse, Herbert, 16 Marketing, 45, 47, 51, 59, 80, 147, 174 -boards, 71, 91-92, 218 Markets, 38, 48, 50, 59, 62, 92, 124, 133, 141, 169, 243 Marriage, 31 Marshall Plan, 135, 208 Marx, Karl, 13, 14, 15, 16, 72, 165, 196, 197, 198 Mass enthusiasm, 16 Masses, 35, 117 Materialism, dialectical, 15, 16, 165 Materials, supply of, 10, 11 Maximisation, 13, 14, 15, 104, 135

INDEX

Meat, 121 Mechanical equipment, 49, 50, 106 Mechanisation of agriculture 47, 53 Medicine, 30, 137 Mercantilism, 18, 181 Metal industry, 51 Mexico, 39, 45, 52, 64, 65, 127 Middle Class, 28, 175 Middle E a s t , 106, 113, 115 Migration, 33, 41, 46, 50 -to U.S.A., 37 Military, The, 116, 117, 119, 242 in Ghana, 1 7 8 - 1 8 1 Millet, 158 Millikan, 56, 59 Missionaries, 160, 166, 230 Money, 29 Money lenders, 49, 179 Mongolia, 127 Monopoly, 142, 174, 189 Moral indignation, 16, 17 value system, 18, 197 Morocco, 65 Mortality, 30 Moscow, 34 Moshavim, 78 Multiplier, 17, 134, 182, 228 Nagasaki, 18 Nasser, President, 118 National income, 40, 143, 165, 217 product, 125 resources, 98, 131 Nationalism, 166 Nazi, 17 Near E a s t , 52, 122, 138 Needs, false, 18 Neo-Colonialism, 12, 119, 234 Nepotism, 143, 169, 172 Netherlands, 12, 26, 36 Neustadt, 159, 184, 191 New Zealand, 37, 65, 122 Nigeria, 183, 203 Nightmare, 15 N k r u m a h , 75, 93, 118, 164, 165, 172, 173, 184, 201, 211, 212, 213,

251

214, 219, 221, 224, 231, 237 N.L.C. (National Liberation Council), 165, 172, 183 N . P . K . (Nitrogen, Phosphates, Potash, K20), 54 N u t t e r , G. Warren, 197 Oceania, 58 Oil, palm and seed, 121, 158 Oil, production and companies, 194, 228 Omaboe, 159, 184, 191 Opportunity Cost, 29 Organisation, 139 for agra-production and distribution, 7 1 - 9 7 in Ghana, 2 1 7 - 2 1 8 of rural masses, 118 O u t p u t , 37, 38, 39, 40, 47, 59, 142, 143 per acre 32, 44—70 per capita, 32, 43, 44—70, 120, 174 Pakistan, 52, 65, 228 P a l m oil, 92 P a n a m a , 124, 125 Parasitic existence, 35 of elites in towns, 232 Paris, 34 P a r t y , 14, 15, 18, 49 officials, 166, 171, 173 ruling, 214 Pasteur, L., 30 Penalties, 15 Pensions, 28 Peru, 46, 65 Pest control, 62, 64 Pesticides, 54, 55, 6 2 - 6 6 , 241 Petro-chemical industries, 148, 155 Philippines, 65, 108, 111 Plague, 31, 32 Plan, Development, 129, 130, 144, 171, 176 Planner, 15, 117, 141, 199, 202 Planning, 59, 125, 126, 127, 128, 148, 171, 172, 190, 209 in Ghana, 2 1 9 - 2 2 5

252

INDEX

Plantations, 62, 92—95, 134, 175 Poland, 18, 36 Police, 163 Political appointments, 168 constraints in Ghana, 210—219 hegemony, 117, 243 environment, 35, 98, 134 impediments, 98, 116—119 organisation, 215, 217 power, 15, 162 in Ghana, 163—168 systems, 171, 217 unrest, 129 Population, 11, 23—43, 45, 57, 58 density of, 26, 27, 42, 53 growth as result of economic progress, 32 insufficiency of, 25 rate of accretion, 11, 12, 29, 65, 120 Postan, M.M., 30 Poverty, 14, 18, 49 Power, 26 Pressure groups, 118 Prestige, 28, 29, 80, 99, 100, 110, 142, 161, 167, 214 Prices, 36, 37, 57, 59, 64, 73, 74, 80, 96, 110, 117, 122, 133, 134, 136, 164, 190, 199, 215, 234, 241, 242 export, 123 supported, 137 Priests, 27 Priorities, allocation of, 139—149, 202 Private enterprise, 137, 237 Producer goods, 199 Production agricultural, 33, 35, 61, 65 diversification of, 92 industrial, 36 methods of, 11, 12, 32, 33, 140 modern modes of, 10, 13, 14 norms of, 15 Productivity, 10, 13, 25, 31, 34, 35, 37, 40, 43, 45, 50, 54, 104, 107, 112, 140, 141, 157, 169

in agriculture, 34, 37, 50, 159 Profit, 181 Profitability, 55, 101, 102, 243 Protection, 29 Proteins, 96 Prussia, 103 Puerto Rico, 124 Purchasing stations, 71, 136 Quantitative and Qualitative changes, 9 Railways, 103 Rates of interest, 115 Rational, 18 rationally, 13, 15, 16, 18, 29 rationalism, 18 rationalist, 17 Raw materials, 27, 39, 45, 51, 57, 132, 141, 156, 174 Reformism, 9 Religion, 18, 33 Rent, 106 control, 108—109 Reserves, 164, 173, 212 Resources man-made, 131, 132 natural, 131 Respectability, 83 Responsibility, 10, 79, 83, 143, 167, 171, 186, 205, 226, 238 moral, 11, 12, 148 Revolution, agricultural, 140 Rewards, 10 Rico, 12, 61, 128, 158 Roads, 215, 217 Rodents, 25, 55, 62 Rolling plan, 221 Rome, 34, 35 ancient, 35, 36, 103 Rotative cultivation, 24, 57, 106 Roth, Yair, 93, 206 Roundwood, 121, 122 Rubber, 91, 92, 121, 123, 129, 203 Russia, 9, 87, 107, 118, 164, 174, 197, 198, 199, 201, 202 Collective farms in, 86—90 Soviet Union, 53, 58, 65

253

INDEX Salination, 55 Salt, 27 Sartre, Jean-Paul, 242 Saving, 29, 35, 109, 110, 147, 170, 181, 188, 241, 243 Science, 33, 98, 132, 140, 166, 230, 232 Seasonal fluctuations, 38, 46, 47, 50, 136 Security, 29, 95, 107, 114, 168 material and social, 28, 141 Seeds, 26, 54, 55, 60—62, 64, 105, 241 Seedlings, 55, 60 Self-interest, 226 Self-reliance, 104 Self-sufficiency, 136 Servants, 216 Services, 45, 51, 112 Share cropping, 105 Shell Company and others, 194 Shifting (rotative) cultivation, 42 Silos, 51, 55, 60, 63, 137, 190, 217 Slavery, 15, 18, 72 Slicher van Bath, 36, 67 Smallholders, 75, 134 Smith, Adam, 9 Social attainment, 135 change, 31, 41, 229 climate in Ghana, 168—172 environment, 35, 99, 134 image, 28, 100, 101 organisation, 14, 17, 77 pressures, 16, 78, 79, 162, 178, 232 structures, 161, 163, 172, 220 systems, 161, 168, 215 traditions, 41 values, 145 Socialism, 166 Societies primitive and rural, 29, 77 socialist, 15, 71 Sociocultural structures, 93 economic structures, 14, 119, 167, 188

political structures, 196, 209 South Africa, 17 Soya beans, 123 Spaghetti, 73 Spare parts, 10, 53, 133 Specialisation, 36, 37 international, 131 Spengler, Oswald, 18 Stability, 117, 130, 163, 227, 241, 242 Stalin, 15, 16, 172, 200, 201, 230 Stalinism, 16, 197, 198 Starvation, 14, 15, 17, 33 State direction of demand, 210—225 enterprises, 170, 173, 176 farms, 92—95, 170, 173, 202 intervention, 14 investments, 147 marketing boards, 91 — 92 the, as agent of development, 137, 1 9 9 - 2 0 9 Steuart, James, 34, 35, 184 Storage, 51, 56, 59, 60, 62, 136, 137 Strikes, 216 Subsidies, selective, 136, 190 Subsistence crops, 36, 62, 175 economies, 49 farming, 48, 50, 61, 202 Sudan, 107, 109, 126 Sugar, 91, 121, 122, 123, 203 Superstructure, 15 Supervision, 59, 61, 79, 148, 188, 190, 200 of plan implementation, 200— 201

Surplus product, 35, 37, 38, 40, 43, 72, 200 Switzerland, 26, 181 Symbols, 170 of status, 218 Synthetic materials, 124 Syria, 39, 45, 65, 126, 128 Taiwan, 39, 64, 65, 95, 107, 109, 124 "Take-off", 9, 39, 40 Tariffs, 123, 133

254

INDEX

Tawney, R.H., 13, 33, 75 Taxation, 1 1 2 - 1 1 3 , 176, 199, 243 Taxes, 63, 71, 117, 134 Tea, 92, 121, 123 Techniques, 36, 37 agricultural, 24, 46 Technology, 11, 14, 18, 23, 24, 41, 72, 73, 98, 132, 148, 204 Terracing, 46 Thailand, 39, 65, 127 Thompson, Warren S., 34 Thought, 160 Time, 9, 44, 59, 61 Tobacco, 122, 168 Tomatoes, 158 Towns, 34, 35, 36, 37, 38, 81, 90, 103, 108, 117, 140, 164, 166, 175, 243 Tractors, 52—54, 78, 91, 92 Trade, 40, 102 International, 41, 120—138 Traders, 101, 179, 242 Traditions, 59, 62, 74, 75, 93, 96, 102, 104, 105, 106, 140, 172, 188, 209 Transport, 26, 41, 45, 51, 57, 59, 62, 81, 103, 106, 136 Trees, 48, 61 Tribal ties, 71, 75, 166, 168, 169, 172, 178, 188, 201, 214 Tribe, 15, 16, 106 Tsetse flies, 62 Tunesia, 66, 126 Turkey, 53, 66 Uganda, 128 U.K. wheat yields, 26 Ukraine, 103 UNCTAT, 40, 123, 124 Underdeveloped countries, 39, 48, 58, 108, 124 Underemployment, 24, 41, 44, 45, 47, 51, 54, 92, 159, 169, 170 Unemployment, 10, 14, 15, 17, 25, 46, 48, 50, 61, 63, 64, 74, 77, 79, 81, 163, 168, 169, 175, 198 disguised, 24, 44 UNESCO, 167, 168, 189, 231

Universities, 232 in Ghana, 160 United Nations, 64 population studies, 28 Statistical Yearbooks, 27, 42, 63, 57, 58 Uruguay, 46, 66, 125 U.S.A., 40, 42, 197, 206 Vaccines, 30 Value statements, 18 systems, 13, 161, 230, 233, 241 Venezuela, 39, 64, 65 Vicious circle, 10, 49, 77 Vienna, 34 Vietnam, 117, 181, 238 Volta, 158, 220 Wages, 10, 73, 133, 134, 162, 168, 196 in Ghana, 181—187 Waste, 10 Water holes, 56 management, 55—57, 60, 241 supply, 26, 42, 64, 66, 64 ways, 41, 61 wells, 66 Wealth, distribution of, 12, 242 Weeding, 48, 62 Welfare, 13, 71, 107, 117, 137, 195 Wheat yields, 26, 44 Whetham, Edith M., 39 Winneba Ideological Institute, 165 Wish to produce, 34, 35, 38 World Bank, 220, 222 Yam, 158 Yellow Peril, 18 Yields per acre of land, 24, 26, 43, 4 4 - 7 0 , 120, 159 per capita 24, 41 Yugoslavia, 42 Zambia, 128 Zimmerman, L . J . , 171