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

handle is hein.journals/guild19 and id is 47 raw text is: BOOK REVIEWS

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-
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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