You are on page 1of 7

THE FIVE STAGES-OF-GROWTH--A SUMMARY It is possible to identify all societies, in their economic dimensions, as lying within one

of five categories: the traditional society, the preconditions for take-off, the take-off, the drive to maturity, and the age of high mass-consumption. THE T !"ITI#$!% &#'IET( )irst, the traditional society. ! traditional society is one whose structure is developed within limited production functions, based on pre-$ewtonian science and technology, and on pre-$ewtonian attitudes towards the physical world. $ewton is here used as a symbol for that watershed in history when men came widely to believe that the e*ternal world was sub+ect to a few knowable laws, and was systematically capable of productive manipulation. The conception of the traditional society is, however, in no sense static, and it would not e*clude increases in output. !creage could be e*panded, some ad hoc technical innovations, often highly productive innovations, could be introduced in trade, industry and agriculture, productivity could rise with, for e*ample, the improvement of irrigation works or the discovery and diffusion of a new crop. -ut the central fact about the traditional society was that a ceiling e*isted on the level of attainable output per head. This ceiling resulted from the fact that the potentialities which flow from modern science and technology were either not available or not regularly and systematically applied. -oth in the longer past and in recent times the story of traditional societies was thus a story of endless change. The area and volume of trade within them and between them fluctuated, for e*ample, with the degree of political and social turbulence, the efficiency of central rule, the upkeep of the roads. .opulation--and, within limits, the level of life-rose and fell not only with the se/uence of the harvests, but with the incidence of war and of plague. 0arying degrees of manufacture developed, but, as in agriculture, the level of productivity was limited by the inaccessibility of modern science, its applications, and its frame of mind. 1enerally speaking, these societies, because of the limitation on productivity, had to devote a very high proportion of their resources to agriculture, and flowing from the agricultural system there was an hierarchical social structure, with relatively narrow scope--but some scope--for vertical mobility. )amily and clan conne*ions played a large role in social organi2ation. The value system of these societies was generally geared to what might be called a long-run fatalism, that is, the assumption that the range of possibilities open to one3s grandchildren would be +ust about what it had been for one3s grandparents. -ut this long-run fatalism by no means e*cluded the short-run option that, within a considerable range, it was possible and legitimate for the individual to strive to improve his lot, within his lifetime. In 'hinese villages, for e*ample, there was an endless struggle to ac/uire or to avoid losing land, yielding a situation where land rarely remained within the same family for a century.

the world of medieval Europe. the period when the preconditions for take-off are developed. that is. social and political structure. the centre of gravity of political power generally lay in the regions. and thus to en+oy the blessings and choices opened up by the march of compound interest. To place these infinitely various. as well as its economy. saw the stage of preconditions arise not endogenously but from some e*ternal intrusion by more advanced societies. The preconditions for take-off were initially developed. favoured by geography. was the first to develop fully the preconditions for take-off.!lthough central political rule--in one form or another--often e*isted in traditional societies. -ut we are. for it takes time to transform a traditional society in the ways necessary for it to e*ploit the fruits of modern science. merely clearing the way in order to get at the sub+ect of this book. These invasions-literal or figurative-shocked the traditional society and began or hastened its undoing. however. The more general case in modern history. social structure. The landowner maintained fluctuating but usually profound influence over such central political power as e*isted. in 8estern Europe of the late seventeenth and early eighteenth centuries as the insights of modern science began to be translated into new production functions in both agriculture and industry. backed by its entourage of civil servants and soldiers. -ut all that lies behind the break-up of the 4iddle !ges is relevant to the creation of the preconditions for take-off in 8estern Europe. THE . natural resources. transcending the relatively self-sufficient regions. is to say very little indeed. !mong the 8estern European states. with the phrase 3traditional society3 we are grouping the whole pre-$ewtonian world : the dynasties in 'hina. to fend off diminishing returns. the post-traditional societies. in which each of the ma+or characteristics of the traditional society was altered in such ways as to permit regular growth: its politics. remained untouched or unmoved by man3s new capability for regularly manipulating his environment to his economic advantage. E'#$"ITI#$& )# T!7E-#)) The second stage of growth embraces societies in the process of transition. in the hands of those who owned or controlled the land. the civili2ation of the 4iddle East and the 4editerranean. imbued with attitudes and controlled by interests transcending the regions. in a setting given dynamism by the lateral e*pansion of world markets and the international competition for them. for a time. that is. In terms of history then. on the ground that they all shared a ceiling on the productivity of their economic techni/ues. !nd to them we add the post-$ewtonian societies which. -ritain. trading possibilities. . and 5to a degree6 its values. after all. but they also set in motion ideas and sentiments which initiated the process by which a modern alternative to the traditional society was constructed out of the old culture. changing societies in a single category. in a clearly marked way.

The idea spreads not merely that economic progress is possible. but also the emergence to political power of a group prepared to regard the moderni2ation of the economy as serious. the building of an effective centrali2ed national state--on the basis of coalitions touched with a new nationalism. and it was. almost universally. -anks and other institutions for mobili2ing capital appear. the take-off. The forces making for economic progress. and in raw materials in which other nations may have an economic interest. hut that economic progress is a necessary condition for some other purpose. in opposition to the traditional landed regional interests. the take-off awaited not only the buildup of social overhead capital and a surge of technological development in industry and agriculture. for e*ample. the colonial power. notably in transport. the traditional society persisted side by side with modern economic activities. $ew types of enterprising men come forward--in the private economy. The scope of commerce. using the new methods. conducted for limited economic purposes by a colonial or /uasi-colonial power. In many recent cases. The take-off is the interval when the old blocks and resistances to steady growth are finally overcome. Investment increases. private profit. a necessary condition for takeoff. here and there. or both--willing to mobili2e savings and to take risks in pursuit of profit or moderni2ation. !nd. In the more general case.6 the pro*imate stimulus for take-off was mainly 5but not wholly6 technological. THE T!7E-#)) 8e come now to the great watershed in the life of modern societies: the third stage in this se/uence. Education. into its habits and institutional structure. or both. 1rowth becomes its normal condition. the general welfare. modern manufacturing enterprise appears. but we shall leave it for chapter 9. where the anatomy of the transition from a traditional to a modern society is e*amined. or a better life for the children. . . e*pand and come to dominate the society. was a decisive aspect of the preconditions period. a decisive feature was often political. 'anada etc. widens. In -ritain and the well-endowed parts of the world populated substantially from -ritain 5the :nited &tates. +udged to be good: be it national dignity. communications. by the old social structure and values. broadens and changes to suit the needs of modern economic activity. and by the regionally based political institutions that developed in con+unction with them. 'ompound interest becomes built. -ut all this activity proceeds at a limited pace within an economy and a society still mainly characteri2ed by traditional low-productivity methods. internal and e*ternal. for some at least. in government. high-order political business. which yielded limited bursts and enclaves of modern activity. !lthough the period of transition--between the traditional society and the take-off--saw ma+or changes in both the economy itself and in the balance of social values. There is a great deal more that needs to be said about the preconditions period.olitically. as it were.

)rance and the :nited &tates to the several decades preceding =?C>. yielding profits a large proportion of which are reinvested in new plant. !s indicated in chapter A. in 'anada before the =?@>3s and !rgentina before =@=A. Dapan. . The whole process of e*pansion in the modern sector yields an increase of income in the hands of those who not only save at high rates but place their savings at the disposal of those engaged in modern sector activities. thereafter. the third /uarter of the nineteenth century. as in ussia and 'anada during their pre-=@=A railway booms. regularly sustained.>3s India and 'hina have. The new class of entrepreneurs e*pands. and it directs the enlarging flows of investment in the private sector."uring the take-off. for e*ample. for moderni2ation of a society increases radically its bill for agricultural products. while during the =@. The make-up of the economy changes unceasingly as techni/ue improves. In such cases capital imports usually formed a high proportion of total investment in the preconditions period and sometimes even during the take-off itself. the fourth /uarter of the nineteenth century.<. The economy finds its place in the international economy: goods formerly imported are produced at home. the services to support them. new industries accelerate. In a decade or two both the basic structure of the economy and the social and political structure of the society are transformed in such a way that a steady rate of growth can be. &ome =>-E>< of the national income is steadily invested. ussia and 'anada the /uarter-century or so preceding =@=A. The revolutionary changes in agricultural productivity are an essential condition for successful take-off. in /uite different ways. balancing off the new against the older . one can appro*imately allocate the take-off of -ritain to the two decades after =B?9. although where heavy social overhead capital investment was re/uired to create the technical preconditions for take-off the investment rate in the preconditions period could be higher than . say. in turn. and increasing numbers of farmers are prepared to accept the new methods and the deep changes they bring to ways of life. stimulate. as. permitting output regularly to outstrip the increase in population. the rate of effective investment and savings may rise from. $ew techni/ues spread in agriculture as well as industry. new import re/uirements develop. and new e*port commodities to match them. as the now regularly growing economy drives to e*tend modern technology over the whole front of its economic activity. "uring the take-off new industries e*pand rapidly. older industries level off. The society makes such terms as it will with the re/uirements of modern efficient production. through their rapidly e*panding re/uirement for factory workers. as agriculture is commerciali2ed. The economy e*ploits hitherto unused natural resources and methods of production. < of the national income to =>< or more. launched their respective take-offs. a further e*pansion in urban areas and in other modern industrial plants. and for other manufactured goods. 1ermany. and these new industries. THE " I0E T# 4!T: IT( !fter take-off there follows a long interval of sustained if fluctuating progress.

for e*ample. shelter. and clothing. the leading sectors shift towards durable consumers3 goods and services: a phase from which !mericans are beginning to emerge. This. but its dependence is a matter of economic choice or political priority rather than a technological or institutional necessity. and heavy engineering industries of the railway phase to machine-tools. chemicals. focused during the take-off around a relatively narrow comple* of industry and technology. for e*ample. &ome si*ty years after take-off begins 5say. but anything that it chooses to produce. and with which &oviet society is engaged in an uneasy flirtation. THE !1E #) HI1H 4!&&-'#$&:4. combined with the broader conse/uences for a society3s ability to absorb modern technology of three successive generations living under a regime where growth is the normal condition. for e*ample6 the raw materials or other supply conditions re/uired to produce a given type of output economically. clearly. but also the proportion of the population working in offices or in skilled . It may lack 5like contemporary &weden and &wit2erland.TI#$ 8e come now to the age of high mass-consumption.. in time. was the transition through which 1ermany. whose not une/uivocal +oys 8estern Europe and Dapan are beginning energetically to probe. where. we can define maturity as the stage in which an economy demonstrates the capacity to move beyond the original industries which powered its take-off and to absorb and to apply efficiently over a very wide range of its resources--if not the whole range-the most advanced fruits of 5then6 modern technology.values and institutions. This is the stage in which an economy demonstrates that it has the technological and entrepreneurial skills to produce not everything. which are considered in chapter . )ormally. no dogmatism is +ustified about the e*act length of the interval from take-off to maturity. !nalytically the e*planation for some such interval may lie in the powerful arithmetic of compound interest applied to the capital stock. -ritain. and the structure of the working force changed in ways which increased not only the proportion of urban to total population. or revising the latter in such ways as to support rather than to retard the growth process. there may be a shift in focus from the coal. -ut. it would appear that something like si*ty years was re/uired to move a society from the beginning of take-off to maturity. The economy. !s societies achieved maturity in the twentieth century two things happened: real income per head rose to a point where a large number of persons gained a command over consumption which transcended basic food. has e*tended its range into more refined and technologically often more comple* processes. and the :nited &tates had passed by the end of the nineteenth century or shortly thereafter. Historically. forty years after the end of take-off6 what may be called maturity is generally attained. iron. )rance. -ut there are other sectoral patterns which have been followed in the se/uence from take-off to maturity. and electrical e/uipment.

the first sought money. and they have chosen. the society ceased to accept the further e*tension of modern technology as an overriding ob+ective. but it was in the =@E>3s. after a point. as they place a low value on what they take for granted and seek new forms of satisfaction. In addition to these economic changes. 8estern societies have chosen to allocate increased resources to social welfare and security. and. but it is also at this stage that resources tend increasingly to be directed to the production of consumers3 durables and to the diffusion of services on a mass basis. It is in this post-maturity stage.F F In Thomas 4ann3s novel of three generations. )or the :nited &tates. -ut it is . !mericans have behaved as if. for e*ample.TI#$ -eyond. the bicycle. The sewing-machine. and then the various electric-powered household gadgets were gradually diffused. The emergence of the welfare state is one manifestation of a society3s moving beyond technical maturity. they placed a lower valuation on ac/uiring additional increments of real income in the conventional form as opposed to the advantages and values of an enlarged family. for durable consumers3 goods. the turning point was. -E(#$" '#$&:4. its logical conclusion. In the =@. the second. the third. at the margin. by every sign. Historically. looked to the life of music. -ut even in this adventure in generali2ation it is a shade too soon to create--on the basis of one case--a new stage-of-growth. and again in the post-war decade. The &oviet :nion is technically ready for this stage. larger familiesbehaviour in the pattern of -uddenbrooks dynamics. the changing aspirations of generations. virtually. having been born into a system that provided economic security and high mass-consumption. the income-elasticity of demand for babies may well vary from society to society. through the political process. its citi2ens hunger for it. sought social and civic position. have behaved in the past decade as if diminishing relative marginal utility sets in.factory +obs-aware of and an*ious to ac/uire the consumption fruits of a mature economy. born to money. The phrase is designed to suggest. perhaps. based on babies. but 'ommunist leaders face difficult political and social problems of ad+ustment if this stage is launched. e*cept perhaps to observe that !mericans. accounting substantially for a momentum in their economies /uite une*pected in the immediate post-war years. the decisive element has been the cheap mass automobile with its /uite revolutionary effects--social as well as economic--on the life and e*pectations of society. Henry )ord3s moving assembly line of =@=9-=A. in succession to the age of consumers3 durables: as economists might say. at least. then. it is impossible to predict. =@AC-. that this stage of growth was pressed to. that. however. born to comfort and family prestige.>3s 8estern Europe and Dapan appear to have fully entered this phase.C. if consumers3 sovereignty reigns.

8hen the conventional limits on the theory of production are widened. #":'TI#$ These stages are not merely descriptive. finally. investment. in an impressionistic rather than an analytic way. The argument that follows is based on such a fle*ible. In the four chapters that follow we shall take a harder. the sweep into maturity generally taking up the life of about two further generations. it need not immediately do6 the diversion of the fully mature economy to the provision of durable consumers3 goods and services 5as well as the welfare state6 for its increasingly urban-and then suburbanpopulation. The classical theory of production is formulated under essentially static assumptions which. and more rigorous look at the preconditions. the take-off itself. and then.free2e-or permit only once-over change. as they appear to an economic historian. if it does. converging with certain domestic forces making for moderni2ation.in the variables most relevant to the process of economic growth. as we shall see. -ut they have tended to do so in forms so rigid and general that their models cannot grip the essential phenomena of growth. how man might fend it off: a matter considered in chapter C. They have an inner logic and continuity. ! "($!4I' THE# ( #) . -ut even in this introductory chapter one characteristic of this system should be made clear. !s modern economists have sought to merge classical production theory with 7eynesian income analysis they have introduced the dynamic variables: population. and investment 5and the balance of production between consumers and capital goods6 but which focuses directly and in some detail on the composition of investment and on developments within particular sectors of the economy. technology. and consumption as a whole. but for each sector of the economy. entrepreneurship etc. saving. and the processes which have led to the age of high mass-consumption.F . disaggregated theory of production. rooted in a dynamic theory of production. -eyond lies the /uestion of whether or not secular spiritual stagnation will arise. They have an analytic bone-structure. Here then. They are not merely a way of generali2ing certain factual observations about the se/uence of development of modern societies. are the stages-of-growth which can be distinguished once a traditional society begins its moderni2ation: the transitional period when the preconditions for take-off are created generally in response to the intrusion of a foreign power. and. 8e re/uire a dynamic theory of production which isolates not only the distribution of income between consumption.true that the implications of the baby boom along with the not wholly unrelated deficit in social overhead capital are likely to dominate the !merican economy over the ne*t decade rather than the further diffusion of consi3 mers3 durables. the take-off the drive to maturity. it is possible to define theoretical e/uilibrium positions not only for output. if the rise of income has matched the spread of technological virtuosity 5which.