I begin with the literature of mercantilism. This term derives from Adam Smith who depicted what he called the mercantile theory of wealth as preoccupied with policies designed to produce a favourable balance of trade; and if we take it in this sense, I do not think there is’ much to be said for associating it directly with the idea of development. It is still a matter of controversy why this particular objective was chosen. Was it because importance was attached to the accumulation of the precious metals per se or as a reserve against future contingencies? Or was it because of a perception, inadequately explained, of the easerrlent to credit and employment prevailing when the balance was favourable? There is certainly more to be said for the latter hypothesis than the nineteenth-century classical economistswere prepared to recognise.
But it would be difficult to find any advocacy of a favourable balance which specifically made it a prerequisite of development. Rather the contrary indeed: the development of particular industries was justified in terms of their favourable effects on the balance. If, however, we use the term mercantilism in the wider sense in which it has been used by Schmoller and his school and – with much. greater distinction – by Eli Heckscher, if, that is to say, we use it to cover most of the economic literature in the period between the end of the Middle Ages and the coming of classical economics, I then there is certainly much to be found which bears upon our subject even though it is aggregate production rather than production per head which usually seems the object of discussion. For the raiso.n d’etre of this literature, \vhen it was not merely the pursuit of special interests, was essentially national policy, nation-building if you like to put it pretentiously; and although this had many aspects other than economic development, yet a great deal of it could quite reasonably be included under the heading. It would be difficult to claim, however, that from the point of view of these lectures, this literature, vast as it is, offers very much of general interest.
The almost endless flood of pamphlets advocating the development of this or that form of economic activity – the fisheries, the woollen industry, shipping, the draining of fens, the creation of roads and waterways – were doubtless often meritorious enough in their historical setting and have interest too in that context. I But of general significance for the theory of economic development, there is little of any value. Presumably some case can be made for the view that the argument for the protection of infant industries has. its antecedents here 2 – there are certainly plenty of arguments for protection of one kind or another. But for the most part, you have to have quite a special kind of enthusiasm to read back into this mass of ad hoc suggestions and improvisations anything which deserves the name of general theory.
If I were asked to pick out one single work which most typifies the appearance in the eighteenth century ofscientific economics, I should have no hesitation in citing Cantillon’s Essai sur la Nature du Commerce, which with its system and objectivity, its deep analytical insight and its wide empirical knowledge is almost unique in that or any later age. But in spite of many penetrating obiter £/,icta on the subject, I should not cite it as being especially concerned with the theory of development. Cantillon was at once too detached from policy and too interested in unveiling the essential interconnections of the system of production and exchangeto put development-as suchin the foreground of his analysis. For that we have to look to the works of the Physiocrats and to Adam Smith’s Wealth of Nations. To begin with the Physiocrats.
There can be no shadow of doubt that their focus was upon development. More than most, the Physiocratic literature is encumbered by a superstructure of what Comte would have called metaphysics – natural law and the infallible method whereby societies may be happy and just. But at the core is a theory of development. Quesnay and his disciples saw the French economy burdened with a load of regulations which they regarded as inimical to productivity, and their analysis was directed to show why this was so and how the removal of these regulations would lead to greater prosperity. Unfortunately this analysis was vitiated by an important technical error, the restriction of the idea of productive labour to agricultural and extractive industry — outside these groups, all labour engaged in manufacture, transport, commerce and finance was ipso facto unproductive or sterile. Now it is important to realise the nature of·this error. They did not deny the usefulness of the unproductive labour; although the terminology waS affectively toned, the division was analytical not pejorative.
Nevertheless, there was more in the Physiocratic system than this analytical ineptitude. The celebrated Tableau Economique of Quesnay was not, as its adepts contended, an invention which was on a par with the invention of writing or money. But it was a serious attempt to elucidate the circulation of wealth as defined in their system; in this respect it has some ancestral relationship to modern input-output analysis. And – what is more relevant to my theme – in Quesnay’s Premier Probleme Economique, in Mirabeau’s L’Anti des Hommes and in the jointly written Philosophie Rurale of the two authors, it was overtly used to explain the mechanism of advance or decline, according as the prescriptions of the school were, or were not, adopted. I do not think that this aspect of the Tableau had much influence on subsequent thought, save perhaps on Marx’s somewhat tortuous but nevertheless interesting reproduction tables. But in any just view ofthe history ofthe theory of development in the sense in which I am treating it, it certainly deserves honourable mention.
