Problems with development economics - Can labor-capital models predict the responses of agrarian societies to development?, part I

American Journal of Economics and Sociology, The,  Oct, 1995  by David H. Smiley

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Notes

1. This modification, apparently not reported in the literature, may be useful in the analysis of enclosures such as those associated with the industrial revolution, with 19th century colonial development and with its 20th century manifestation in apartheid.

2. "We think two million sleep on the streets. Birth and death rates are unknown but certainly high" (Calcutta street clinic doctor interviewed by the author). To these homeless must be added dwellers in "hutments," constructs of recycled plastic, carpet and iron waste. "If these hutments grow at the same speed, very soon more than 60 to 65 percent of the population will be slums. . ." (Mahrata Chamber of Commerce, Pune). Todaro (1989: 266,267) tabulates, for selected LDC cities, slums as percentages of urban populations, and the contributions of migration to urban growth rates. For example, Calcutta slums form 67 percent. For urban growth, for India as a whole, migration accounts for 45 percent. Estimates vary with the fuzziness of the terms used, but "representative numbers place almost half the urban workforce in developing countries in the informal sector" (Gibson and Kelly, 1994). Clearly, there are large definitional, and very large measurement problems here.

3. The history of Site Revenue can be traced from J. S. Mill, through Smith, Ricardo, item one of the Communist Manifesto, Henry George (1981), Sun Yat Sen, more recently to its applicability to third world development problems by King (1977), to Harrison (1983), and to several Nobel prize-winners in their restructuring proposals for the USSR (Solow, Modigliani, Tobin et al. 1991). The theoretical bases of Land Value Taxation (LVT), or Site Revenue (SR) as it is now sometimes referred to, lie in the notions that socially created values should be returned to society as revenue (J. S. Mill), that poverty derives from land monopoly (George 1979), and that land rent is in the nature of a surplus which can be taxed heavily without distorting production incentives (Samuelson, 1964: 541). The mechanics of a limited version have been well tested in local government property taxes for about 100 years. Its practical relevance to the third world appears economically substantial and socially unavoidable.

References

Barke, M. and G. O'Hare, The Third World: Diversity, Change Interdependence, Edinburgh: Oliver & Boyd, 1984.

Basu, S., "Rural Debt", Unpublished Notes, School of Economics and Financial Studies, Macquarie University, Australia, 1994.

Bauer, P., Dissent on Development, Weidenfeld & Nicolson, 1972.

Bhaduri, A., "Agricultural Backwardness Under Semi-Feudalism," The Economic Journal, March 1973.

Bhattacharya, D., Economic Development and Underdevelopment, Australian Professional Publications, 1989.

Boone, P., "The Impact of Foreign Aid on Savings and Growth," Working Paper 1265, Centre for Economic performance, London School of Economics, 1994.

Cohen, S., Agrarian Structures and Agrarian Reform, Boston, Martinus Nijhoff, 1978.

George, H., Progress and Poverty, New York: Robert Shalkenbach Foundation, 1979.