Political Econ of Growth. Paul A. Baran

to lay down the criteria by which the “sorting out” process should be carried out. For it can only be a socialist society itself—in which people are not governed by the profit motive and in which the individual is steeped not in the “values” and mores of the market place but in the consciousness emerging from the new, socialist relations of production—which will give rise to a new structure of individual preferences and to a new pattern of allocation of human and material resources. All that the social scientist can do in this regard is to serve as Hegel’s “owl of Minerva which commences its flight in the onset of dusk,” and signal orbi et urbi that a social order is fatally ill and dying. The concrete forms and working principles of what is moving to take its place and the exact specifications of the changes which the new society will carry in its train, can be broadly visualized but not precisely established by economists and statisticians, however skillful they may be. This must be left to the social practice of those who will struggle for and succeed in achieving a socialist order.

      Of a different nature is another argument advanced against the theory of the rising surplus. Its burden is that the distinction between socially desirable output and economic surplus is irrelevant, even if it could be made with all the required exactness. For since a satisfactory level of income and employment depends on an adequate amount of aggregate spending regardless of what the spending is on, the question whether it evokes useful output or waste, employs productive or unproductive labor is brushed aside as having no bearing on “business conditions,” and on the extent to which the society of monopoly capitalism provides for “fullness” of employment. This reasoning, cogent as it is, resembles all Keynesian short-run analysis in being desperately myopic. It is undoubtedly true that investment in productive equipment and investment in submarines, consumption of books and “consumption” of advertising, incomes of physicians and incomes of drug peddlers, all enter aggregate effective demand and help to maintain income and employment. It is equally clear, however, that the resulting structure of output, consumption, and investment exercises a profound impact not merely on the quality of society and the welfare of its members but also on its further growth and developmental possibilities. Moreover, while a few decades ago it might have been possible to argue that, given a shortage of rational employment, any employment—as irrational as digging holes in the ground, for example—is better than no employment, even this cold comfort is no longer available in our day when the alternative to unemployment is no longer relatively innocent digging but the all but innocent stockpiling of means of destruction.¹⁹

      A further objection has been voiced that while all the above may be correct, it should not be forgotten that it is precisely owing to all the irrationality and waste that characterize monopoly capitalism that high levels of income and employment are maintained, considerable amounts of rational investment are induced, and certain—if admittedly low—rates of economic growth are achieved. This argument is very much akin to the counsel to burn the house in order to roast the pig. But the worst of it is that it is not even true that in the process “the pig gets roasted,” that—to paraphrase J. K. Galbraith²⁰—such increases in wealth as have taken place under monopoly capitalism in the United States go far to render the irrationality of the system “inconsequential.” It surely is not “inconsequential” that even after World War II—during what C. Wright Mills has so aptly called the years of the “Great American Celebration”—in at least one half of the period (1948-1949, 1953-1954, 1957-1958, 1960 to date) government-reported unemployment has been in the neighborhood of 5 million, and according to trade union sources no less (and probably more) than 6 million.

      Nor can it be shrugged off as “inconsequential” that in what has come to be referred to as the affluent society, approximately one third of the people live under conditions of abject poverty, and at least one fifth of all American families (and twice as large a proportion of non-white American families) subsist in miserable substandard and slum dwellings. And if cold statistical aggregates are left aside and concrete conditions are examined in specific areas, the human tragedy encountered defies description. “In a slum section composed almost entirely of Negroes in one of our largest cities,” writes a former president of Harvard University, James Bryant Conant, “the following situation was found: A total of 59 percent of the male youth between the ages of sixteen and twenty-one were out of school and unemployed. They were roaming the streets.…”²¹

      All that can be said for the objection now under discussion is that the development of capitalism in general and of its last phase—monopoly capitalism—in particular, while nowhere near creating anything resembling a good society,²² has produced the objective potentialities for the emergence of such a society. The prodigious expansion of the forces of production which has taken place during the period of imperialism, although a by-product of war, exploitation, and waste, has indeed laid the foundations for the truly affluent society of the future. But such a society cannot evolve under the rule of an oligarchy administering society’s vast resources for the benefit of a few hundred giant corporations and with the all-controlling purpose of the preservation of the status quo. Such a society can become reality only when its abundant resources will be administered by a human “association in which the free development of each is the condition for the free development of all.”

      This brings me to the second comment which I should like to make in connection with the monopoly capitalism chapters of this book. This comment refers to the view of innovation and technological progress under monopoly capitalism which is there advanced. Although I still believe in the basic soundness of Steindl’s contention, to which I subscribed, that technological progress and innovation are a function of investment rather than vice versa, I have devoted insufficient space to the undeniable dialectical interaction of the two processes. Not only do the institutionalized research and development staffs of giant corporations operate, to some extent at least, with a momentum of their own and grind out inventions and technical improvements as a matter of normal routine,²³ but what is perhaps even more important, the military establishment which has become a permanent and vast component of the economy of monopoly capitalism, has turned into a continuously operating “external stimulus” to both investment and scientific and technological progress. As the demand of the military has to a considerable extent replaced the demand of the would-be investor, so the sequence of Soviet Sputniks and Luniks has taken over some of the functions of the “perennial gale” of competition. This does not call for regressing to the position of Schumpeter to whom technological progress was a deus cum machina—autonomous and inexplicable. Nor does it imply that technological progress determines investment, so that forthcoming increments to knowledge tend to be regularly translated into additional productive facilities. What it does suggest, however, is that the consolidation of research and development activities within the framework of giant corporations combined with a steady flow of military demand creates certain investment opportunities when there otherwise would be fewer or none. And the importance of the military nature of demand as well as of the monopolistic and oligopolistic nature of supply expresses itself most precisely in the selection of the technological potentialities which are made use of as well as in the rejection of those which remain in the files of scientists and engineers. Both the slow progress made in the economic application of atomic energy as well as the very uneven advances in automation would seem to justify the proposition that only that technical progress is acceptable to monopolistic and oligopolistic business which is either required by the military or sharply reduces costs without at the same time unduly expanding output.

      III

      We turn now to the underdeveloped countries. To Chapters Five, Six, and Seven, dealing with one of the three dominant themes of our age (the other two being the vicissitudes of monopoly capitalism during its current period of decline and fall, and the outlook for the nascent socialist societies in Europe and Asia),²⁴ I would like to add a qualification and a reaffirmation. The former has to do with the applicability of the general theory advanced in this book to some highly populated areas with what Marx called the “Asiatic mode of production”—notably India and Pakistan. In such parts of the underdeveloped world, several critics