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19 Law. Guild Rev. 37 (1959)
Book Reviews

handle is hein.journals/guild19 and id is 47 raw text is: BOOK REVIEWS THE POLITICAL ECONOMY OF GROWTH by Paul A. Baron. Monthly Review Press, 1957, New York. Pp. xii, 308. $5.00. No economic problem today commands more atten- tion than that of economic growth, and justly so. Moreover, the problem of growth is not confined to any one country or area, or to countries at a particular stage of economic development. Nor, of course, is it solely, or even most importantly, an economic prob- lem. All this becomes evident simply through a casual reading of the daily newspapers. Whether the news stems from France, from the Soviet Union, from India, Brazil, or Indonesia, unless it deals with developments in the arts, or in religion, or the like, it is likely to have some direct or indirect reference to questions of eco- nomic growth. This is so for various reasons, but those reasons all stem from a basic core: the rate of growth of an economy provides it with the necessary (though not the sufficient) condition for its social strength and health; and, if that rate is inadequate, the basis for social crisis has been established. This is more easily seen for the so-called underdeveloped soci- eties than for rich societies such as our own, but it is just as true for the latter as it is for the former. It might be said, for example, that since America is so rich it need not continue to expand its productive capacity in the future as it has in the past. But our economy must continually expand or, in the absence of large-scale institutional change, it will contract. And, if it contracts to a significant degree, we have a social crisis on our hands (and the probability of large-scale institutional change). In the underdeveloped societies, on the other hand, it is obvious that the combination of poverty, weakness in international affairs, and domestic political imperatives requires that economic growth take place, and at a rapid rate. One consequence of this critical problem has been a rapidly growing literature on the subject in economics (and in other social studies). The book here under review is to a very large degree a critique of this con- ventional growth economics, and a very sharp critique at that. Its author, Professor Baran, is a unique figure in the economics profession in America. He is an avowed Marxist, and he holds a good position at one of our leading universities (Stanford), a tribute both to him and his institution. Moreover, his is not in any important sense a revisionist form of Marxism, ex- cept in that Professor Baran is fully aware of the de- velopments in society and in social science since Marx's day. This is to say that Baran still holds to the basic tenets of 19th century Marxism: a belief in the ultimate rationality of man and in the possibility of unlimited social progress to a humane and intelligently ordered society, based upon worldwide social revolution. Such a social philosophy makes for a provocative and chal- lenging argument, to which we will now turn, Baran's starting point, often overlooked, as he says, by conventional analysts, is that economic develop- ment has historically always meant a far-reaching transformation of society's economic, social, and politi- cal structure, of the dominant organization of produc- tion, distribution, and consumption. Economic de- velopment has always been propelled by classes and groups interested in a new economic and social order, has always been opposed and obstructed by those in- terested in the preservation of the status quo, rooted in and deriving innumerable benefits and habits of thought from the existing fabric of society, the prevailing mores, customs, and institutions. It has always been marked by more or less violent clashes, has proceeded by starts and spurts, suffered setbacks and gained new terrain- it has never been a smooth, harmonious process un- folding placidly over time and space (pp. 3-4). How, and whether, economic development takes place depends upon the manner in which society's economic surplus is utilized. On this point, all economists will agree. Baran's use of this notion, however, sets him apart from almost all other contemporary economists, and it is the key to his entire analysis. He first of all distinguishes between three ways of viewing the sur- plus: the actual surplus, the potential surplus, and the planned surplus. The first of these is simply the dif- ference between actual total output and actual con- sumption. The second is defined as the difference between the output that could be produced in a given natural and technological environment with the help of employable productive resources, and what might be regarded as essential consumption. (p. 23. Italics in original.) The planned surplus is that which would exist in a planned socialist society. Baran's essential criticism of conventional growth economics is that it discusses economic development in terms of the use of the actual surplus, rather than the potential surplus. This in turn implies that conven- tional economics assumes development to take place by and large within the institutional status quo, whereas the potential surplus derives its meaning from a whole- sale restructuring of social institutions. In other words, the surplus available for economic development would rise significantly if capitalist and/or imperialist and/or

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