Paul Mattick 1968

Review: “An Inquiry into the Poverty of Nations.”
By Gunnar Myrdal. Assisted by William J. Barber, Altti Majava, Alva Myrdal, Paul P. Streeten, David Wightman and George W. Wilson. 3 Volumes, charts and tables, 2,284 pp. The Twentieth Century Fund, New York, cloth, boxed, $25. Pantheon Books, New York, paper, boxed, $ 8.50. 1968.

Source: International Socialist Journal, July 1968, Year 5, number 26-27, pp. 385-402.
Transcribed: by Thomas Schmidt;

Professor Myrdal’s vast study – the result of a decade of research – deals with the countries of South Asia, with their poverty and their developmental needs. While embracing Pakistan, Ceylon, Burma, Thailand, Malaysia, Indonesia, Laos, Cambodia, South Vietnam and the Philippines, it concentrates chiefly on India. The regional approach is chosen for comparative purposes and because it was once thought that regional cooperation was a real possibility. In any case, the various countries have enough basic similarities to justify this procedure, particularly because Myrdal’s main concern is analytical rather than merely descriptive. It is for this reason also that Myrdal deals extensively with methodological questions within the general text and in a number of appendices.

Economic problems must be studied, according to Myrdal, in their demographic, social, and political settings. While this is a general requirement, it is especially necessary when dealing with underdeveloped nations. This should excuse the length of the book, because the central idea in Myrdal’s own “institutional approach is that history and politics, theories and ideologies, economic structures and levels, social stratification, agriculture and industry, population development, health and education, and so on, must be studied not in isolation but in their mutual relationships.” It may also be said, however, that the book’s extraordinary length is partly due to Myrdal’s habit of repeating key statements more often than seems necessary.

In Myrdal’s view, a comprehensive institutional approach includes the value premises of the social scientist, determined, as they are, by his relation to his own cultural and social milieu. The long-sustained lack of interest in the problems of underdeveloped countries on the part of the economists, for instance, reflected the more favorable social and economic circumstances of their own conditioning. Now that political changes have led to a real concern with underdevelopment, the bias of modern economics asserts itself, in Myrdal’s view, in cold-war considerations which exclude objective research, and in the insistence upon concepts and theories which may have some validity in a Western setting but which remain totally irrelevant as regards the actual problems of the underdeveloped part of the world. Because there is no disinterested social science, Myrdal states his own value premises which are incorporated in suggested particular directions of social change for South Asia’s nations. These are the changes also desired, at least verbally, by the articulate elements within these nations, which are supposed to lead to modernization, greater productivity, planned development, higher living standards, social and economic equalization, national independence, political democracy, and to more progressive attitudes and institutions.

The unfolding development, as well as lack of development, in South Asia’s nations Myrdal sees as a drama, the action of which “is speeding toward a climax. Tension is mounting: economically, socially, and politically... This drama has its unity in a set of inner conflicts operating on people’s minds: between their high-pitched aspirations and the bitter experience of a harsh reality; between the desire for change and improvement and mental reservations and inhibitions about accepting the consequences and paying the price (34)."[1]

The main actors in this drama are the educated classes, or intellectual elites, which, while intent on overcoming the general apathy on the part of the masses, are themselves divided in their loyalties. “On the one hand, they are vehicles for the modernization ideas, but on the other hand, they are tied to the privileged groups with vested interests in the status quo (117).”

In order to find out what must and can be done in this situation, Myrdal turns to the political problems and economic realities that characterize the region. Although nothing new is revealed, the great mass of observed details offered by Myrdal and their integration into a general picture is quite impressive and makes his work one of the most informative in the literature on South Asia.

With the exception of Thailand, all the nations of this region have been colonies and their colonial past has to be taken into consideration in order to appreciate their current aspirations and the difficulties in the way of their realization. Although the process of national emancipation is not as yet complete, Myrdal has no doubts “that in a few years’ time all colonial peoples will be politically independent (129).” This is the more certain, he thinks, because, contrary to what Hilferding, Luxemburg, and Lenin were saying, capitalism has no need for imperialism. If this may be so as regards its direct colonial form, in its neo-colonial indirect form it is still a reality, as Myrdal himself is forced to admit when dealing with the relations between the developed and underdeveloped countries.

Political independence of the nations of South Asia was itself the result of the dissolution of the colonial power system in two world-wide imperialistic wars, which first provided the opportunities for national liberation movements and which assured their success. The political history of these nations since independence has been determined less by their developmental needs than by their preoccupation with territorial questions. Colonial domination, Myrdal relates, resulted in the creation of larger political entities than those which existed in pre-colonial times. New frontiers were the outcome of the historical interplay of imperial policies and rivalries, and this unfortunate inheritance led to national rivalries between the newly independent countries. While some were trying to regain “lost” territory, others refused to give up territory bequeathed them by the old colonial powers. And thus, “while South Asian governments denounce colonialism and all its works, they have formed an intense emotional attachment to one of the most important legacies of colonialism, namely, their own territorial definitions (186).”

Political independence and the national rivalries in its wake did not affect the social relations within the various nations of South Asia. In a country-by-country review, Myrdal shows that real power below the government level is still wielded by peasant landlords, merchants, and moneylenders. What happened in these nations was merely the replacement of foreign by native privileged groups. In contrast to the poverty-stricken Indian masses, for instance, the national political leaders are all members of the privileged upper class. Hierarchical structures of the civil service, with its wide social as well as salary differentials between the higher and lower classes, nave been retained. The caste system was left undisturbed, and “is probably stronger today than it was at the time India became independent (278).” Governments cater to private interests, corruption and nepotism are widespread, politics is considered an avenue to privileges and patronages, and “the new tax burdens are heaped for the most part on those sections of the populations least able to bear them (285).” There are political and economic differences between the various countries, such as the change from sham parliamentary governments to military dictatorships, the prevalence or absence of plantation industries, the percentage of the landless within the agricultural population, and so forth. But everywhere, “by leaving real power with the opponents of economic and social change, political stability implies stagnation (295).”

As regards the prevailing economic realities in South Asia, it must first be noted that agriculture is the dominant branch of production. It differs from such production in other parts of the world by a much lower output per unit of arable land. Scrutinizing the many-faceted agricultural problem, Myrdal comes to the conclusion that a raising of living standards would necessitate a higher output per unit of land and only after this has been achieved would it be possible to set labor free for purposes of industrialization. “Low incomes are only the other side of low labor productivity,” he writes: “a vicious circle makes poverty and low levels of living, or low labor productivity, self-generating. Behind this unfortunate causal mechanism there is, besides the parameter of climate, a social system of institutions and power relations, that is severely inimical to productivity, at the same time as low productivity establishes itself as the norm. And within this social system, both shaped by it and upholding it, are the ingrained attitudes of people in all classes (433).”

Tradition-bound and disregarding the population increase, most of the people of South Asia live and work within an agricultural system based on subsistence farming. Although peasant proprietorship has steadily been giving way to tenancy and share-cropping, the surplus thereby produced, but falling to the landlords, did not provide incentives for greater productivity. Commercial plantation farming producing tea, rubber, coconut, tobacco, coffee, sugar, and spices were very lucrative, however, and by being based on wage-labor must be considered capital-intensive industrial enterprises. But plantation farming for export was mostly in the hands of Western capital and its profits were remitted abroad, so that “the plantation spurred the industrialization of the Western countries but not of South Asia (449).” The impoverishment of the peasant population was due in part to the systematic destruction of native crafts by the colonizers, which condemned the colonies to being producers of exportable raw materials and importers of industrially-manufactured goods. But even the extension of laissez-faire policies to the colonies worked in favor of the colonizers, for their different economic and technological levels are a “natural mechanism tending toward greater inequality (456).”

The poverty of the nations of South Asia is too obvious to require statistical proof. What economic data exists, Myrdal finds “so unreliable that not much importance can he attached to them (498),” not only because of the crudeness of statistical procedures, but also because “large sections of the economy are non-monetized and without much of a link with any markets (477).” However, and for whatever it may be worth, Myrdal utilizes some data with respect to national output, or income, and to the structure of the economies as determined by agriculture, industry, and types of manufacturing establishments. We learn that workers are largely employed in cottage industry, that private manufacturing firms are quite small, and that, with the exception of India, “heavy industry, producing consumer durable or producers goods, is conspicuously absent (521).” Incomes are not only extremely low but show increasing inequality with respect to both the rural and urban populations.

Although Myrdal seems convinced that the expenses of empire exceeded their gains so that the end of colonization was a blessing for colonizers and colonized alike, the structures of the South Asian economies are nonetheless “the product of international economic and political relationships developed over the past century (581).” Being largely producers of primary products, these countries suffer from a decreasing demand for their traditional exports. If development is to occur, in Myrdal’s view, it will come not as a response to foreign demand, but must be internally based “since the spontaneous growth-inducing stimulus of a relatively free and expanding international trade is no longer present (583).” Development must proceed in relative independence of the world market and together with a stimulation of intra-regional trade. But while there is little hope for larger exports, there is a growing need for imports. Development thus depends on the “ability to attract adequate amounts of foreign capital on reasonable terms (612).” Thus, far however, and with the United States as the leading exporter of capital, little has been done in this respect. The “inflow of fresh private capital from abroad... exceeded the repatriation of capital by only negligible amounts (622).” Capital from public sources has flowed in somewhat more rapidly, but, reflecting strategic and political cold-war considerations, it did not stimulate economic development.

Because the nations of South Asia must increase their exports in order to cover their import requirements, and since this cannot be done in traditional ways, Myrdal suggests a diversification of production as well as alternative markets, such as may be found in Communist countries and the underdeveloped nations of Latin America and Africa. But even so, he realizes that “export prospects... do not appear promising (661).” And neither does the influx of capital in the form of credits, as the “debt service is becoming an increasing burden (665),” absorbing as it does a growing portion of export earnings. Loans should be replaced by grants, “but the trend has been, and is, in the opposite direction (666).” All in all, it is a dismal picture, which appears the more hopeless as the whole Western approach to the development of underdeveloped nations is basically wrong because of the dominant idea that such development will be a mere replica of that of the now-advanced nations. But Myrdal insists that the initial conditions prevailing in the underdeveloped countries are so different and of “such a nature as to prohibit a pattern of growth analogous to that experienced in the developed Western countries (674).”


Myrdal traces this idea on the part of modern economists to their unacknowledged acceptance of the Marxian proposition that “the country that is more developed industrially only shows the less developed the image of its own future (674).” He does not seem to realize that Marx was speaking here of Continental Europe, and particularly of Germany, but not of the world at large[2]. Referring to a Russian critic, Marx once pointed out that although entering the stage of capitalist development means that a good portion of peasants must be turned into proletarians, “his historical sketch of the genesis of capitalism in Western Europe (must not be changed) into an historico-philosophical theory of the general path every people is fated to tread[3].” It is true, of course, that in Marx’s view capitalist colonialism involved “the annihilation of the old Asiatic society and the laying of the material foundations of Western society in Asia[4],” but this did not mean that its further development would follow the definite historical path of the old capitalist nations. For Marx, “the specific task of bourgeois society is the establishment of the world market, at least in outline, and of production based upon this world market."[5] This task was accomplished, as Myrdal himself points out in his descriptions of the economic relationships between the colonies and the capitalist nations.

Capital accumulation determines the character of the world market. Just as its concentration and centralization tendencies imply the polarization of rich and poor in each capitalist nation, so they imply the division of the world into poor and rich countries. Industrialization and modernization can proceed only insofar as this is compatible with the accumulation requirements of the dominating capitals. Their own development is based, in part, on the lack of development of countries subjected to their exploitation. On the basis of his own theory, it could not enter Marx’s mind that all nations would some day become fully-developed capitalist nations, even though all would be part of the monopolistic capitalist world market.

While Myrdal’s argument does not apply to Marx, it does fit the so-called growth theories of bourgeois economy which see the historically-limited and fetishistic categories of capital production as universally-valid and eternal economic categories. “Economics” as a “positive science” allows the economists both to abstract from the real socio-economic relations and to suit their theories to the specific, and mostly apologetic, needs of capitalist society. From their point of view, the underdeveloped nations can only repeat that development which leads to the formation of capital. Myrdal, too, sees development as capitalization, but he feels that “the modern approach tends to overlook or minimize the factors that make development so difficult in the underdeveloped countries or, conversely, that should necessitate radical and comprehensive policy measures (1853).” Things felt out in the fashionable model-building for development, such as climate, population, health, education, attitudes, and so forth, must be brought back into the analysis, so as to enable the formulation of more realistic policies for the underdeveloped nations. Development, moreover, cannot be awaited as a process of natural evolution, but must be planned and hastened by “a telescoping of change as the only alternative not only to continued stagnation but to regression (700).”

An appendix, prepared by Professor Streeten, goes somewhat deeper into the question of the usefulness of economic models for planning in South Asia. He admits that the separation of “economic” from “non-economic” factors makes some sense in the West, where “people’s attitudes and social institutions have been rationalized and standardized and are therefore either adapted or adaptable to economic progress (1942).” But this is not true for South Asia, he says, where attempts to change attitudes and institutions meet with strong opposition from vested interests and other obstacles and inhibitions. Streeten also admits that Marx did not accept the isolation of “economic” from “non-economic” factors; yet “Marxism,” he says, “fell into the opposite error of assuming that the required adjustments in the parameters – attitudes and institutions – occur inevitably and rather rapidly (1942)” – a position which bases itself, as Myrdal believes, on the Marxian proposition that “the whole culture is a superstructure erected on the modes of production (1864).”

Because “economic development is much more than industrialization (1842,)” Myrdal finds it necessary to treat each South Asia country “as a social, system, consisting of a great number of conditions that are causally interrelated, in that a change in one will cause changes in others (1860).” That this is not so, however, is made clear in his own text, which bewails the fact, for instance, that the achievement of political independence and the new ideology of planning and modernization altered nothing in traditional social and economic relations. Obviously some things can change while others remain the same, the persistency of some conditions in the face of changes in others should indicate that among “the great number of conditions which are causally interrelated” some are more important than others. This is only another way of saying that there are basic social relationships which underlie all other social relationships and for that reason must have priority in any social analysis.

For Marx, too, “economic development is more than industrialization,” even though it is by way of industrialization that capital accumulates rapidly. Political economy – not to speak of “economics” – is a bourgeois “science,” which Marx criticized on the ground, among others, that it changed social into economic categories. These categories have meaning only for bourgeois society, wherein the actual social relations between peoples and classes appear as economic relations. As such, they have to be attended to in order to detect capitalism’s developmental tendencies, but they must also be recognized as social class relations. Social attitudes and institutions cannot really contradict the mode of production, that is, the relations of production as capital-labor relations. If they would, capitalism could not exist. And so long as they do not seriously contradict the mode of production, an analysis of the latter is at once an analysis of the ruling attitudes and institutions.

A definite mode of production can, however, accommodate a variety of attitudes and institutions, or institutions and attitudes may change without affecting any change in the mode of production. A change from political democracy to fascism, or from laissez-faire to a mixed economy, for instance, will change the “superstructure,” but the result remains the “superstructure” of the untouched basic social production relations. It is 392 for this reason that the analysis of capital production can, and even must, abstract from the “superstructure.” This is not a question of the isolation of “economic” from “non-economic” factors and neglect of the latter. In the Marxian view, the apparently “economic” factors and the apparently separate “non-economic” factors both find their determination in the underlying social relations of production, which are totally disregarded by bourgeois economy and by Myrdal as well.

Neither is this a question of the tempo of the “adjustments” of attitudes and institutions to economic change. For Marx, it is the impossibility of such “adjustments” which makes for revolutionary change. For Streeten and Myrdal, however, change and development seem mainly a problem for underdeveloped countries. In the developed nations, “economic progress” leads to more or less automatic adjustments of attitudes and institutions, and changes in the latter do not impair further economic development. In other words, although the “superstructure’s” determination by the mode of production is denied, a developed capitalism, in their views, tends to bring the “economic” and “non-economic” factors into equilibrium, thus allowing for a relative disregard of the “superstructure,” or of the “non-economic” factors, of social life. It is, then, only in the underdeveloped countries that economic progress requires a deliberate change of attitudes and institutions and therewith political activities which affect the whole of society.

Actually, even in highly-developed capitalism only some attitudes and institutions “adapt” themselves to economic change, or, vice versa, economic change to altered attitudes and institutions. Changes that occur “automatically,” or are evolutionary, do not disturb the class-conditioned mode of production, nor do they affect the immanent developmental tendencies of the given mode of production. They can thus be disregarded in its analysis. To alter the mode of production requires a situation wherein attitudes and institutions prevent a necessary change in the mode of production, and where the actualization of such change demands different attitudes and institutions such as correspond, that is, to another mode of production. It is clear, then, that the Marxian distinction between base and superstructure implies just as much a difference as an identity, which finds its mediation in the social revolution. Neither “economic” nor “non economic” factors as such, nor both in combination, are responsible for stagnation or social change. Whether one or the other of these conditions prevails depends on the struggle of social classes in defense of, or in opposition to, a given mode of production and on the outcome of these struggles.

Myrdal differentiates himself from “modern economics” by his recognition of the necessity of political revolutions and social change in underdeveloped countries. Marxists do not deny this necessity. The Marxist analysis of capital production is that, however, of an established capitalist system. As such, it is not directly applicable to the countries of South Asia, which to an overwhelming extent find themselves in a pre-capitalist state of arrested development. A Marxian analysis of South Asia would have to deal with different modes of production and with different social forces trying to maintain or to change them. This does not hinder but encourages considerations of attitudes and institutions, just as the Marxist analysis of capital production does not prevent but fosters a concern with general social issues.

Because the existing conditions, attitudes, and institutions in South Asia are co-determined by those existing in the capitalistically-developed nations, a Marxian analysis would have to deal with the relationships of the South Asian nations to modern capitalism as an imperialist world-market system. To estimate the chances of their development requires not only a thorough grasp of their particular socio-economic conditions, but also an understanding of capitalism’s general developmental tendencies. But while Myrdal recognizes that the development of South Asia depends also “on the commercial and foreign exchange policies pursued by other countries, even their domestic policies and their rates of growth, and, more, generally, on structural changes in world demand and supply (1891),” he pays no attention to the exploitative character of capitalism and to its increasing need to subordinate development to its own specific profit requirements. These may prove to be a greater hindrance to the development of underdeveloped countries than their own stationary or regressive attitudes and institutions. And thus, while the analysis of capital production cannot supplant an analysis of the modes of production prevalent in South Asia, it is nonetheless a prerequisite for a realistic comprehension of the region and of its possible future.


The capitalist mode of production, that is, relations of production as capital-labor relations, identifies social progress with the accumulation of capital, which determines and limits the volume and direction of industrial development, and gives social attitudes and institutions their peculiar capitalistic characteristics. So long as this system expands without effective opposition, it may appear, at any rate to its beneficiaries, as the ideal economic system. Because all that matters in this system is the formation of capital; the latter is generally treated “as the strategic variable... juxtaposed to output as the dependent one.” And since in the capitalistically-advanced countries output has been growing roughly in proportion to capital input, growth models have largely been based on the theory of a constant capital/output ratio. These growth models 394 are held to be equally useful for the developmental plans in underdeveloped countries. Myrdal and Streeten find them unrealistically abstract, because “rational planning in South Asia has to be a coordinated system of policies directed at a very large number of conditions that must be changed to engender development. The approach to planning represented by the capital/output model lends to conceal this fact and provides no useful theoretical framework for this type of planning (1056).”

Myrdal’s institutional analysis is also an abstraction, of course, but with a claim to greater realism. With the wrong assertion that “in the social system there is no up and down, no primary and secondary, and economic conditions do not have precedence over others,” Myrdal classifies the causally interrelated social conditions into six broad categories: “Output and income; conditions of production; levels of living; attitudes toward life and work; institutions; and policies (1860).” These, and their various subdivisions, have to be considered in planned development, and planning there must be to have development at all. “The basic principle in the ideology of economic planning,” Myrdal writes, “is that the state takes an active, indeed the decisive, role in the economy: by its own acts of investment and enterprise, and by its various controls – inducements and restrictions – over the private sector, the state shall initiate, spur and steer economic development (709).”

The ideology of state planning, which, according to Myrdal, must be counted among the social facts which determine policies, stems from the Communist countries as well as from the West. However, in so far as it can be traced to the West, it implies no more than state interventions in the otherwise private-enterprise economy. When Myrdal says that “all Western governments as well as business people are supporters of state planning in South Asia (728),” they are so only in this particular and limited sense. Actually, there is no planning in the West; although governments intervene, the economies remain subject to the vicissitudes of uncontrollable market events. Neither is there planning in South Asia. Here, as Myrdal complains, “the planners remain in their paradoxical position: on a general and non-committal level they freely and almost passionately proclaim the need for radical social and economic change, whereas in planning their policies they treated most warily in order not to disrupt the traditional social order (117).” Yet, because state planning exists as an ideology, all that seems necessary to Myrdal is that planners should lose their inhibitions and begin practising what they preach.

As in the West, the development plans in South Asia are essentially nothing but fiscal policies for public investments, which make it possible, as Myrdal says, “to have a plan without planning, to create an appearance without reality (2008)”; particularly so, because fiscal budgets are here such a small part of the total economy. Real planning, for Myrdal, would have to embrace the private sector of the economy as well, and would require interventions in market relations by planned pricing policies. This, too, would not suffice, because “the bulk of the marketable surplus of agricultural produce is not provided by a market process but is exacted as tribute from sharecroppers and other peasants by the landlords and moneylenders on whom they depend (913).” It is for these and other reasons, that “a plan that conveys what it purports must be based on some kind of physical factors, goods, and services in the various sectors of the economy (1919).”

What Myrdal has in mind is a planned system such as exists in Russia, but modified to suit the mixed economy under the conditions that prevail in South Asia. While, on the one hand, he appreciates the Russian government’s ability “to free resources for investment by a consumption squeeze in such a way as to combine suppression in some direction with rapid and substantial increase in others, as dictated by the requirements of growth (1918),” on the other hand, as far as South Asia is concerned, he seems to prefer a less rigorous planning system, wherein “it is part of the function of the plan to assist in striking compromises and bargains between conflicting interests and to construct a framework within which conflicts of convictions and interests can be thrashed out (1891).”

It is, then, not a definite plan which Myrdal proposes, but rather a political program, in which planning is itself an evolving process to assure the “upward movement of the entire social system.” Only those changes in the social structure that would assure an increase in production and productivity would be required. More is needed than a planning approach which sees in investments the sole strategic factor; particularly, because capital inflow from abroad can never be more than supplementary; so that provisions for development must be internally created. The given conditions must first be improved, which demands a greater emphasis “on agriculture, and on raising the levels of education and health, on increasing the volume of labor input, and on improving labor efficiency in the economy as a whole (1842).”

Myrdal believes that even without investments, but through longer and more efficient work, agricultural yields could be raised substantially. Usually it is argued that there are too many people living on the land, which implies the under-utilization of their labor, described as disguised unemployment, and that some must be removed through employment-providing industrial development. Myrdal shows, however, that these supposedly superfluous peasants have no inclination to go anywhere, and if they had, would have no place to go to. But neither are they inclined to work harder – the result of insufficient incentives and a generally-prevailing antipathy toward work, especially wage-labor. “The scale of values determining social ranking in rural South Asia,” Myrdal points out, “continues to be a pre-capitalist one. To own land is the highest mark of social esteem; to perform manual labor, the lowest (1057),” which induces even the poorest of landowners to prefer a miserable existence to any form of employment. The actual cultivators of the soil do not have the physical and mental stamina to increase their labor productivity because of ill health, nutritional deficiencies, lack of education, and general attitudes toward life and work “as determined by climate, levels of living, customs and institutions (1016),” Yet, with a decisive change in these latter conditions, Myrdal still thinks it possible to overcome the self-defeating vicious circle of poverty and low labor productivity provided the population growth can be stemmed. The introduction of Western biochemical medicine reduced mortality rates, and with fertility rates remaining what they were, led to a “population explosion” which now threatens not only any economic advance, but stagnation and even deterioration. It has to be coped with through government-directed educational campaigns popularising birth control methods, and through agricultural policies which raise the productivity on the increasing labor force.

While nothing can be done directly about climate, its possibly debilitating effects can be reduced through the productivity-raising effects of education, health, and better consumption. Rut all this presupposes institutional changes and governments able and willing to carry them out. Unfortunately, according to Myrdal, the main characteristic of the countries of South Asia is the existence of “soft states,” which “require extraordinarily little of their citizens (896).” They rely on voluntariness when what is actually needed, in Myrdal’s view, is the enforcement of greater social discipline.

The “soft state” is, of course, the state which corresponds to the social structure of South Asia’s nations. It cannot be expected to engage in activities contrary to its own interests, which, as Myrdal shows so exhaustively, are those of the ruling classes. Apparently, Myrdal deems it possible to have a state which stands above class interests and carries out policies benefitting the nation as a whole. But the “soft state” is such only vis-à-vis the class it represents; it is quite “hard” in its dealings with the oppressed classes simply by not interfering in the traditional production relations. To have another state would mean to have another society, which requires far more than a mere ideological commitment to the general welfare. Myrdal finds it neither possible, nor necessary, however, to change existing social relations. All he proposes is greater efficiency and more production.

What is the state to do to bring this about? Until now, its policies benefitted not the poor but the rich, and its economic controls worked mostly “in favor of established business, and particularly big business (738).” As regards agriculture, government policies are allegedly oriented toward land and tenancy reforms. Actually, however, “in none of the countries of the region have reforms brought any direct benefits to landless laborers (1319).” Because the demand for land is acute, landowners are able to claim half and more than half of the gross output of their sharecroppers, and in view of the rapid growth of the labor force, all “attempts to decrease land rents while allowing landowners to remain as owners... are foredoomed to fail (1311).” While a radical land distribution may increase production by increasing incentives, Myrdal thinks that nationalization would be an even better procedure for a more rational utilization of the land. He is convinced, however, that neither the one nor the other of these policies is feasible at the present time.

There is simply “no enthusiasm for a radical expropriation among a peasantry that jealously guards its private title to even the smallest plot of land, ... nor is support for such measures likely to be found among the landless; their aspirations are for a plot of their own rather than for participating in collective ventures (1376).” Under these conditions it would be best to develop agriculture on capitalist lines. “The indigenous agricultural practice in South Asia,” Myrdal writes, “is typically a form of quasi-capitalism combining the least favorable features of capitalist and feudal pattern of economic organization (1380).” A genuinely capitalist agriculture would be a step forward, as it would not tolerate passive and parasitic landownership... which saps the surplus out but does nothing to enlarge production. The elimination of this type of ownership, Myrdal holds, could be accomplished through a tax system that places severe penalties on the income of non-participatory landowners and through laws prohibiting the future transfer of titles to non-forming residents. This reform, Myrdal emphasizes, “would not take anything from anybody, but would outlaw purchases of land by persons who are not prepared to become cultivators (1380).”

This, again, would presuppose the existence of governments not bound to “passive and parasitic landownership” and, in the absence of such, Myrdal’s suggestions can only fall on deaf ears. He is aware of this, for he sees it as an indication of the real power situation in South Asian countries that such suggestions are not even seriously debated. Still, they may find a hearing at some other time. Myrdal admits that a capitalist pattern of agriculture could lead to a reduction in the demand for labor and could thus impede the fuller utilization of the rapidly growing labor force; for instance, through the introduction of mechanized processes. But if this is the case, it should be the job of the government, he says, to check the use of labor-saving devices. In other words, Myrdal does not really want capitalist farming, determined, as it is, by the profit motive. What he suggests is capitalist agriculture fitted to a planned economy which is not determined by the principles of capital production.

With Myrdal’s “genuine agricultural entrepreneur” goes the agricultural wage laborer, to whom “should be given a respectable place in the capitalist agricultural system (1382).” How “respectable” this place can be under the best circumstances may be surmised from the conditions of agricultural wage-workers in the most developed capitalist nations, namely, the United States. What this “respectability” amounts to in South Asia is clearly demonstrated by the agricultural wage-labor extant in this region. Still, Myrdal is convinced that whatever the present situation, “long-term advance in agricultural output and efficiency car, only be achieved if South Asian people can be brought to accept the fact that wage-employment is a normal and healthy feature of progressive economies (1383).” It is also the way to a social system that would “gradually acquire the characteristics of welfare capitalism (1382).” And thus, Myrdal concludes, it may be just as well to scrap all the current ideological nonsense about egalitarianism and even socialism, not only because it has failed to lead to effective reforms, but also because it stands in the way of realistic and pragmatic solutions to South Asia’s problems.

This, essentially, is the message of Myrdal’s enormous book. It is, of course, an adaptation of the Marxian concept that feudalism makes room for capitalism by a change of the mode of production involving the capitalization of agriculture. “An industrial revolution,” Myrdal writes, “depends on a prior, or at least concurrent, agricultural revolution (1249).” But neither one nor the other of these revolutions is a clean-cut affair. Because capitalist and noncapitalist modes of production intermingle in underdeveloped countries, Myrdal calls the economies of South Asia “quasi-capitalist” systems. He suggests that they be turned into genuine capitalist systems, starting with agriculture and ending up with modern welfare capitalism.

In Marxian theory, capitalism implies the transformation of labor into wage-labor. As regards agriculture, this metamorphosis has not been complete in even the most developed capitalist nations, even though there is no longer subsistence farming but production for the market. However, the individual farmer is steadily displaced by industrial farming based on wage-labor. Like all capitalist production, capitalistic agriculture is competitive production for profit and becomes increasingly more capital-intensive. While at first it frees agricultural labor for industrial production, at a later stage it frees industrial workers from any kind of production by turning them into unemployables. This is the “final” result of the production relations as capital-labor relations under laissez-faire conditions as well as in welfare-capitalism.

It took a long period of development to reach modern welfare capitalism. For the South Asian nations to get there, Myrdal suggests, as a first step, capitalist farming, that is, a repetition of that process described by Marx as part of the transformation from feudalism to capitalism. Yet, in Myrdal’s view, Marx was in error in assuming that all non-capitalist nations would have to follow the path trod by the first capitalist countries. Although this is an erroneous interpretation of Marx’s position, it becomes nonetheless Myrdal’s own vision of South Asia’s development. It must be added, however, that this envisioned development differentiates itself from capitalism’s historical development by the new factor of government planning, which was absent during capitalism’s early days. Supposedly, this makes all the difference by suspending the immanent laws of capital productions, as, for instance, – and to speak in Marxian terms – increasing relative surplus-value by way of technological development. According to Myrdal, governments could prevent this from happening by restricting development to the mere increase of absolute surplus-value, i.e., through longer working-days and greater labor intensity. Not the search for profitability should be the determining element in production, but an over-all plan, the existence of which would presumably turn capitalist into “progressive economies.”

While Myrdal rejects both Marxism and “pure economics,” his own analysis of the manifold and interrelated social conditions that constitute a “social system,” also proceeds from an “economic angle.” He claims, of course, that an approach from any other ‘"angle” would have done just as well; still, in his programmatic conclusions he acknowledges the overruling importance of society’s economic base. For Myrdal, everything depends on raising the productivity of labor and the growth of production. This requires a mode of production different from the prevailing one, and this, in turn, requires policies which bring the change about. To approach the problem from another “angle,” – the political, for instance, could only mean that policies must change so as to bring about a change in the mode of production in order to make possible an increase in production and productivity, which is absolutely necessary in order to have development instead of decay. Whether one starts from the economic or the political “angle,” in either case what finally matters is the mode of production as the determinant of social production and productivity.

Myrdal’s institutional approach to development does not prevent him from quite often coming close to a Marxian position. This may explain his uneasy fascination with Marxian theory, displayed throughout his work. He appears profoundly disturbed by a recognition of the need for revolutionary change and a simultaneous desire to have such change short of revolution. Moreover, he seems convinced, though not completely, that “Marx’s simplistic theory about the class struggle and the proletarian (evolution” is not applicable in the nations of South Asia, and he looks with “profound skepticism” upon the idea “that the increasing impoverishment of the masses in underdeveloped countries will lead to political revolts.” It is perfectly possible, he writes, “that the lower strata in the Indian villages would remain supine in their shackles of inequality even if living standards were to deteriorate still further (796)” He rather pins his hopes on the emergence of governments willing and able to sacrifice special interests to the general social welfare.

Although Myrdal deprecates the possibility of revolutionary actions on the part of the impoverished masses, his sympathies are nonetheless on their side. It is to lift them out of their state of misery and ignorance that the system must be altered and its course set toward development. It is to this end that agriculture must assume a capitalist pattern and, by doing so, mitigate existing social inequalities. Myrdal’s reasoning seems rather surprising on this point, for the division between entrepreneur and wage-worker is no less unequal than that between tenant and landlord. Rut Myrdal explains himself by pointing out that, generally, “the conventional Western approach is predisposed to view reductions in inequalities as more likely to discourage than to encourage expansion in production (1368).” This argument, he says, is not valid for South Asia because, while “the Western economic discussion is normally restricted to the analysis of inequalities in the distribution of income, in South Asia, the inequalities relevant to prospects for economic advance are more deep-seated. They concern not only differences in income, but, more important, differences in status and in control over productive resources (1369).” Since wage-workers are what they are because they have no control over productive resources, the equality of which Myrdal speaks is that of landlord, capitalist peasant and other entrepreneurs – in short, the achievement of bourgeois equality in South Asia, the completion of the delayed bourgeois revolution by non-revolutionary means.

Such an achievement would, of course, differ widely from the earlier results of bourgeois revolutions because of the planning factor which, according to Myrdal, assures a new type of development leading into welfare capitalism. Planning itself requires government domination over the whole of society even though it is to remain a private-enterprise society. Under its auspices, prices for example, would no longer be market-determined but planned, that is, “would be prices that, under all existing conditions including the full range of government policies, would give entrepreneurs and, more generally, producers, traders, consumers, and savers incentives to act according to a particular development plan.

This is quite a tall order. It has never before been suggested or attempted in even the highly-developed welfare capitalism. To be sure, there is a lot of price-fixing in the latter; not to support planned development, however, but to maintain the profitability of specific enterprises. There is also indirect price-manipulation by monetary and fiscal means on the part of central authorities to combat depression and secure a necessary degree of social stability. These policies, however, find their definite limits in the profit – requirements of capital production. It is the latter which determines the character and extent of government interventions, as the conditions in the various welfare-economies currently demonstrate – unless, of course, it is assumed that they “plan” their own economic difficulties. But this kind of pseudo-planning presupposes highly-advanced industrial systems able to afford, if only for a time, engaging in non-profitable production in order to bring total social production up to a higher level. This is the only “planning” possible in the “mixed economy” in response to a declining demand resulting from a decreasing rate of capital formation. It has no relevance whatever for the impoverished nations of South Asia, which must increase the supply in order to accumulate capital. A “planning” fitted to the conditions of underdeveloped market economies would require policies radically different from those that would offer “incentives” to all social layers to induce them to adapt their behavior to the exigencies of a particular development plan.

Myrdal’s dilemma, then, is his theoretical attempt to combine irreconcilable, namely, a capitalist market economy with authoritarian controls designed to subject capital production to actual social needs. This forces him to misunderstand both capitalism and socialism, and to provide them with features they do not possess. It induces him also to assume that it is actually possible to treat the development problems of South Asia in relative isolation from the problems of the capitalist world economy. Although he shows in great detail in what particular manner American capitalism subordinates development in the Philippines to its own specific interests, and though he objects to American imperialism in Vietnam and the whole of Southeast Asia, he still imagines that the capitalist, and therewith imperialist, nations, could be genuinely interested in the development of underdeveloped countries for the sake of development. He suggests that the capitalist nations initiate policies aiding this development, without asking himself whether or not this is actually possible in view of their needs for continuous expansion to secure their own privileged positions. It does not occur to him that it may be far too late to have any kind of progressive development under the auspices of capital production, and that the development of South Asia, most of all, might depend on a further non-capitalist development of the advanced nations.


1. Numbers in parentheses refer to pages in Myrdal’s book.

2. In Capital, Vol. I, p. 13, Kerr ed., Marx wrote: “I have to examine the capitalist mode of production, and the conditions of production and exchange corresponding to that mode. Up to the present time, their classic ground is England. That is the reason why England is used as the chief illustration in the development of my theoretical ideas. If, however, the German reader shrugs his shoulders at the conditions of the English industrial and agricultural laborers, or in optimistic fashion comforts himself with the thought that in Germany things are not nearly so bad, I must plainly tell him, ‘De te fabula narratur’!.”

3. Marx-Engels, Selected Correspondence, Moscow, p. 379.

4. K. Marx, The First Indian War of Independence, Moscow, p. 34.

5. Marx-Engels, Selected Correspondence, p. 134.