Economic misery is something altogether different from mere poverty; it is a scandal and signifies a breakdown of the natural order, for it prevents men from being human. It is a fallacy to assume that once men are given an adequate provision of the necessities of life, the further they can go beyond that the better. But it is no fallacy to assert that adequate provision of the necessities of life is the first priority of all—a priority so high that it transcends all divisions of the human race and becomes the collective task and responsibility of the whole of mankind. Yet it seems to be precisely in this task that we tend to fail. The following notes attempt to find out why.

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The science of economic development cannot be simply economics. Eugene R. Black, the president of the International Bank for Reconstruction and Development, has rightly emphasized that “We are talking about transforming whole societies.” This obviously involves issues far beyond mere economics—as the French political economist, Bert-rand de Jouvenel, has pointed out—and economists have no right when discussing economic development to appraise “every form of change occurring or capable of being brought about in a society . . . solely on the grounds of its contribution to the rate of economic growth.” When it is a matter of transforming whole societies and of destroying ancient traditions, it is illegitimate—even theoretically—for economists to consider that economic development is the end and that “social, psychological, moral, and political change, are means to that end.” It is illegitimate and—as I shall try to demonstrate—a barrier to worthwhile progress.

It is fashionable today to treat all non-economic considerations with impatient contempt. Even Mr. de Jouvenel appears to share in the general impatience when he writes: “As it is a fact that economic growth is widely and ardently desired, the humanistic critique of economic development is doomed to futility. The best it can achieve is to create disequilibria in economic growth by intruding into a general process checks and regulations which do not change the character of the process but which bring it into disorder.” I cannot believe that Mr. de Jouvenel really means this. The humanistic critique of economic development, it seems to me, is today more than ever before necessary, both in the highly developed and in the underdeveloped countries. How can it be said that such a critique must necessarily be doomed to futility or that it would bring disorder into a “general process” which is already in the greatest possible degree disorderly? And, if a critique is called for, is the possibility of futility a valid reason for neglecting one’s duty?

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In fact, there is no “general process” which free men could not alter if a “humanistic critique” indicated to them the need for a change; that, I believe, is also the opinion of Mr. de Jouvenel when he pleads for a “sense of quality within the framework of a search for quantity.” And it is obvious that such a sense of quality can be derived only from an appreciation of spiritual, moral, psychological, and political realities which cannot be treated as subservient to the aims of economics.

It is necessary to insist on these points because, as I indicated above, the neglect of non-economic realities seems to me the principal barrier to worthwhile progress in the very field of economic development with which we are concerned. The science of economics becomes the more exclusively quantitative (and thus a pure abstraction) the more rigorously it is developed. This may be useful for narrowly circumscribed tasks of analysis within a given and stable setting; but it is of extremely limited applicability and, in addition, generally misleading when the task is one of changing the setting itself. Eugene Black, at least, knows this very well. He writes:

It is very easy to forget how exceptional, historically, are the attitudes and institutions necessary for modern economic growth. . . . Just to list a few of the requirements is to illustrate how ambitious is the task of those who would bring modern economic development to an underdeveloped country today. And how uncertain is the outcome in a society which sets out to absorb these very special institutions and attitudes! . . . Man does not come naturally by any of the attitudes and institutions necessary for economic growth; he must be driven—even to hard work—by need, or by the prospect of material gains, or somehow these attitudes must be made politically or religiously inspiring.

Here we have the authentic voice of the modern West. “He must be driven”; some hidden, or not-so-hidden, persuaders must invent political or religious slogans to make “inspiring” those attitudes which are thought to be the precondition of economic development. Here we are not told that the humanistic critique of economic development is doomed to futility because “economic growth is widely and ardently desired,” but instead that men must be driven, coerced, enticed, manipulated. Does not this require a “humanistic critique”? Naturally, the resulting economic development generally proves, as Mr. Black admits, “peculiarly fickle”: “even now it is creating human desires much faster than it is providing means for their gratification.” And Mr. Black’s verdict is that “economic development has left tragic problems in its wake in the underdeveloped world which only more economic development can solve.”

Now this amounts, to say the least, to a somewhat daring prescription. Normally, when a course of action leaves in its wake “tragic problems,” it seems proper to consider whether the course has been set quite correctly and not merely to call for speedier movement in the same direction. The question is not—of course not—whether the rich should continue to try and help the poor, or whether a fight against economic misery, wherever it is to be found, should be carried on: the question is simply whether the type of economic development currently pursued, and the methods of its pursuit, are the right ones. And that question is neither raised nor susceptible of being answered by Mr. Black and all the other multitude of economic technicians who talk about driving men to work and who stimulate desires beyond any practical possibility of satisfaction. To think that the only way to promote economic growth in the so-called underdeveloped countries is to imitate as closely as possible the current practices of the advanced countries (or perhaps to do even better by “jumping” intermediate stages), and to force every time-honored institution into the service of purely material aims of Western inspiration, betrays not only an astounding lack of imagination but also a truly ominous lack of awareness of the dehumanizing deformities of the modern West.

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The problem of the right type or pattern of development is so fundamental and deep that it is highly questionable whether the normal concepts of economics can be applied without tying the mind to the very pattern of living—the pattern of the advanced West—from which they have been abstracted. Mr. Black says that “words like ‘savings’ and ‘investment,’ ‘efficiency’ and ‘productivity’ are the tools of our trade, and like good artisans, we try to develop proper standards for their use,” And Mr. de Jouvenel says that “there are some necessary conditions to any economic growth, such as the accumulation of capital, the acquisition of new techniques, and, above all, the capacity to conceive and to carry out new combinations of productive resources.” Both statements are, of course, impregnable at the formal level. But I suggest that—not necessarily, but in actual practice—they turn the mind in the wrong direction; they produce associations of thought that lead almost inevitably to the tacit assumption that economic development is a, synonym for Westernization. While it is formally true to say that economic development depends on “the accumulation of capital,” on “savings” and “investment,” what really matters is their material source, which is labor, and which, realistically speaking, must be primarily indigenous labor. The labor power of the indigenous populations is the great potential source of “capital,” “savings,” “investment,” and so forth, as it is the source of income. How can it be mobilized and usefully applied?—that is the crux of the question of “savings” and “investment,” When indigenous labor power is directly applied to the creation of durable consumers’ goods like houses, or to capital goods like roads, land improvements, implements, and the like, then “savings” and “investment” come in one act, without any of the monetary associations which these terms normally produce.

Or take Mr. Black’s concepts of “efficiency” and “productivity,” or Mr. de Jouvenel’s “acquisition of new techniques” and “capacity to conceive and to carry out new combinations.” These terms almost inevitably turn the mind toward Western methods, toward ways of doing things that are foreign to the local populations, that overawe or even frighten them, and thus do not help in doing the “one thing needful,” which is to mobilize as fully as possible the indigenous labor power. Such a mobilization can be effected on the required scale only if the people are encouraged to use the methods they know—to improve upon them; to develop them by all means; even to marry them in some cases with methods imported from abroad (if that can be done easily and organically); even occasionally to drop them in favor of something foreign (if that happens naturally and spontaneously). But no such mobilization will be possible if the all-pervading notion is that everything that is different from its Western counterpart is inferior; that the people’s own “know-how” is worthless, that their own traditions must be done away with, that their religion must be modified or abandoned wherever it stands in the way of “economic development.” It is, I suggest, this attitude itself that stands in the way of economic development, because it produces an unconquerable apathy, an atmosphere of hopeless resignation that can do nothing and will do nothing but wait for aid from afar.

Economic development—and again I stress that this means the transformation of whole societies—is a very big thing and, like all big things, depends primarily on movements that take place on the unconscious, rather than the conscious, level. In an Indian journal I find an article titled “A Surfeit of Planning—Where Are the People?” The author—himself an Indian—begins by saying that “the people for whom we plan and weave our dreams are seldom in the picture. More often they are just laborers, wage earners with little sense of participation or adventure in the India we plan to reconstruct. The reasons for such apathy are perhaps very deep, somewhere very near the soul of India.” The author pleads then for a “movement of reconstruction” rather than a plan contrived by economists, in the abstract jargon of economics, because only such a movement, “deciding its aims and targets according to local need and desire from area to area, could gather the people, make them partners in plans which, if not very grandiose, are at least after their hearts.”

These words, in my opinion, are more closely in touch with reality than the language of Western economics; they point to the living source of wealth, which is the labor power of “the people”; they indicate what I believe to be the one decisive criterion for judging the value of any development measures: whether they will encourage or discourage the spontaneous mobilization of this labor power. To quote again from Eugene Black, who after all is the most prominent representative of present-day orthodoxy in matters of economic development: “Even the most enthusiastic supporters of economic aid recognize that the outside world cannot provide more than a small margin of the resources needed; the really crucial economic and human resources must come from within.” But what if the manner in which the “small margin” is injected causes the “really crucial economic and human resources”—namely those that ought to be forthcoming from within—to sink deeper and deeper into the kind of apathy to which the Indian author refers above? This is a question which Mr. Black has not considered because it does not at all fit into his official ideology, which he explains as follows:

In the World Bank we concentrate on economic development as if its only end were higher consumption and greater comfort. We try to remove the taint of ideology from the language of economics and then relate that language solely to the end of promoting higher material living standards.

Is it surprising, then, that this does not reach down to anything that lies near to the soul of the people? That it fails to awaken the soul, but merely makes apathy more fearful and sullen?

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Or take another famous prescription for economic development, W. W. Rostow’s “take-off into self-sustained growth”:

For the present purposes the take-off is defined as requiring all three of the following related conditions:

1. a rise in the rate of productive investment from (say) 5 per cent or less to over 10 per cent of national income (or net national product);
2. the development of one or more substantial manufacturing sectors, with a high rate of growth;
3. the existence or quick emergence of a political, social, and institutional frame-work which exploits the impulses to expansion in the modern sector and the potential external economy effects of the take-off and gives growth an on-going character.

Now I do not wish to quarrel with these sentences as a piece of analysis of past events. But I become very uneasy when (a), (b), and (c) are described as “conditions,” thus turning the analysis into a prescription. These three so-called conditions are, after all, mere abstractions, useful for assisting our understanding ex post facto, but, being abstractions, they cannot be “done” (except possibly by totalitarian methods). They do not touch the people’s heart; they induce the imagination to turn to the actual—that which exists already, and exists most conspicuously in the rich countries—whereas it should be turned to the potential: the unused labor power and creativity of the indigenous population.

As these things are not easily understood, nor easily expressed, I may perhaps give one further example. Bertrand de Jouvenel says this:

It is desirable to examine the means whereby farm income is supplemented by industrial income without any migration of workers. This can of course be achieved if, in areas where there obtains a considerable density of agricultural population, factories can be set up, occupying some members of the family without any need for rehousing.

This statement, again, is perfectly correct in what it says; but is it also correct in what it suggests? It would be if we were speaking in the context of a modern Western country. But in an underdeveloped country full of grinding poverty? “. . . if factories can be set up,” yes, and obviously the poor ignorant villagers could never, by themselves, set up a factory—they have no “savings”; they cannot “accumulate capital”; they lack the “capacity to conceive and carry out new combinations”; their methods, like their traditions, as Mr. Black would say, “have been rendered tragically inadequate by the passing of time.” Yet all this is generally quite untrue. All these gross and insulting errors are conjured up by the use of the words “if factories can be set up”—words which can only serve to confirm the feeling of impotence and despair and apathy of the people who ought to be providing “the really crucial economic and human resources.” We should not be talking in this language at all—about factories and about supplementing farm income by industrial income. We should be talking about getting the people to use their own labor power, with their own intelligence (which is not incapable of picking up improved methods from outsiders), and their own local resources and materials to provide, in the first place, for their own fundamental needs, which are food, clothing, and shelter, and certain communal assets like roads, wells, and public buildings.

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I can, frankly, see no value in discussing such questions—very interesting from an academic point of view—as the ideal size of towns, the ideal location of industry, or the ideal transport system, because even the most brilliant answers to them will do nothing to mobilize the creative power of the people. Instead, I think, we should ask the much simpler and much more profound question: Why is it that the people are not helping themselves? What has come over them? On the whole, throughout history, all healthy societies have managed to solve their problem of existence, and always with something to spare for culture. Grinding poverty, with malnutrition and degradation, with apathy and despair, as a permanent condition of millions of people, not as a result of war or natural catastrophe—this is a most abnormal and, historically speaking, an unheard of phenomenon. All peoples—with exceptions that merely prove the rule—have always known how to help themselves; they have always discovered a pattern of living which fitted their peculiar natural surroundings. Societies and cultures have collapsed when they deserted their own pattern and fell into decadence, but even then, unless devastated by war, the people normally continued to be able to provide for themselves, with something to spare for higher things. Why not now, in so many parts of the world?

I am not speaking of ordinary poverty, but of actual and acute misery; not of the poor, who, according to the universal tradition of mankind, are in a special way blessed, but of the miserable and degraded ones who, by the same tradition, should not exist at all and should be helped by all. Poverty may have been the rule in the past, but misery was not. Poor peasants and artisans have existed from time immemorial; but the existence of miserable and destitute villages in the thousands and urban pavement dwellers in the hundreds of thousands—not in wartime or as an aftermath of war, but in the midst of peace and as a seemingly permanent feature—is a monstrous and scandalous thing which is altogether abnormal in the history of mankind. We cannot be satisfied with the snap answer that this is due to population pressure. Since every mouth that comes into the world is also endowed with a pair of hands, population pressure could serve as an explanation only if it meant an absolute shortage of land—and although that situation may arise in the future, it decidedly has not arrived today (a few islands excepted). It cannot be argued that the population increase as such must produce increasing poverty because the additional pairs of hands lack capital. Millions of people have started without capital and have shown that a pair of hands can provide not only the income but also the durable goods—i.e. capital—for civilized existence. So the question stands and demands an answer: What has gone wrong? Why cannot these people help themselves?

I believe that the cause lies in the impact of the modern West upon these societies and populations. The paralysis or apathy—“somewhere very near the soul of India,” as the Indian author said—is similar to the paralysis of the Aztecs when they met Cortes and his men sitting on the backs of horses and equipped with firearms. It was not the power of the Spaniards that destroyed the Aztec empire, but the disbelief of the Aztecs in themselves. I suggest that the cause of economic misery in a country like India is not the adherence to her own traditions¹ (which Eugene Black presumes to call “tragically inadequate”), but the turning away from these traditions, and that the cause of this turning away is the mere existence, in India and elsewhere, of the modern Western methods of production, distribution, administration, and so forth. Mr. de Jouvenel says that it is more difficult for Asian countries to achieve a “take-off” than it was for the West. This is probably true, but hardly because “the industrial revolution in the West coincided with the demographic explosion, while this explosion occurred in Asia without an attending industrial revolution.” A population determined to help itself is never at a loss for productive tasks to employ all hands. What seems to me of infinitely greater importance is that the West abandoned its own traditions only as it developed and applied the modern methods itself, while the Asian countries—partly owing to European domination—lost (not all, but still too much of) their own traditions, as a result of something that had arisen not among themselves but in the West.

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To talk in purely economic terms, probably the greatest cause of poverty in an underdeveloped country today is the existence of a modern transport system. None of the Western countries ever had to achieve development at a time when transport was fast and cheap. It was only after extensive and broadly based development had taken place that transport became fast and cheap in those countries. To start with, every town and every village enjoyed the protection of high transport costs—a kind of natural tariff to shield it against competition from all other towns and villages. Hence it was obvious and normal that each locality should attempt to provide for its own needs through its own labor, intelligence, and natural resources. And hence there arose a multitude of skills in a multitude of localities, and out of the ground thus prepared grew a middle class among which could be found the adventurers and entrepreneurs for more ambitious enterprises. All this was an organic process of growth, carried forward by individuals coming from “the people,” not by small groups of intellectuals, educated in foreign lands, who took it upon themselves to transform whole societies and create new traditions.

All these possibilities, however, are destroyed by cheap and fast transport. Village industries—thousands upon thousands of small workshops—wither away because there is somewhere an “efficient” modern factory which can deliver similar (though often vastly inferior) goods at a lower price. But is not this the essence of “progress”—the substitution of superior methods of production for inferior ones? Does not the lower price benefit the villagers, raising their standard of living, enabling them to save and to invest and finally to accomplish the “take-off”? Many economists argue this way, but the truth is otherwise. Because they themselves no longer produce, the villagers are poorer than ever before; they may be unable to pay for any of the factory goods, except by getting into debt. It has happened even that the factory itself, having accomplished its frightful work of destruction in the villages, has had to close down for lack of a market.

It was his intuitive understanding of these fatal mechanisms which led Gandhi to say in 1912 that “India is being ground down, not under the English heel, but under that of modern civilization.” On another occasion he said: “Much of the deep poverty of India is due to the departure from Swadeshi in the economic life. If not a single article of commerce had been brought from outside India, she would be today a land flowing with milk and honey.”

Gandhi also proposed that a small part of India ought to be set aside and protected against all goods from outside the area except for necessary commodities not locally producible. The inhabitants of the chosen area would then extricate themselves from their misery by their own efforts and within a very short time.

Economists have assumed too easily that what works best in an advanced country must be best for economic development. Gandhi never made this mistake. “England has sinned against India by forcing free trade upon her. It may have been food for England, but it has been poison for this country.” The problem posed by free trade, however, exists equally within a country when such a country possesses a modern transport system and a fringe of Western-type industries. Efficient and fast communications, like free trade, are food for an advanced country and poison for an underdeveloped country. Modern economists have generally seen the “potential” of an underdeveloped country mainly in terms of its raw material exports to the rich countries; and as such exports are obviously cheapened and facilitated by efficient transportation, the economists have concluded that investment in transport facilities deserves a high priority. This is a tragic error; it must spell ruin unless counteracted by deliberate measures of what might be called “controlled isolation” for a great number of relatively small communities, so that local labor will be used primarily to cover local needs.

It is here also that the institution of money, if handled in a manner which is “food” for advanced countries, may become poison for the underdeveloped. Today there is fairly general agreement that a country struggling for development cannot do so on the basis of free convertibility of its currency—in other words, that there must be some “controlled isolation.” But that the same need arises within the country, particularly a large country like India, is usually overlooked. If no provision is made for this, then there will be innumerable occasions when useful economic activity will only be possible on a barter basis (i.e. without money) or not at all. Barter, however, is clumsy and inflexible; what is really needed is local money or scrip issued in accordance with local needs, such as the American colonies possessed before the Revolutionary War.

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These suggestions will appear reactionary and retrogressive to economists who imagine that the experience of advanced countries, where “development” is self-generating and may even be excessive, can be applied to underdeveloped countries, where “development” is not only urgently needed but also exceedingly difficult to get started. From so unrealistic a point of view my suggestions must of course look retrogressive, because it is in fact necessary to go back in the experience of the advanced countries to the early stages of their own development to find useful analogies.

Mr. de Jouvenel rightly insists that “there are degrees of freedom in the processes” of economic development. This is perfectly true and constitutes a very necessary corrective to certain schools of economic determinism. But it is also necessary to recognize that in a given situation some things are possible and others are not. What is decidedly impossible is to achieve economic development on a wide scale when every budding activity is automatically exposed to the icy blast of competition from production units employing advanced Western techniques of high capital intensity, whether such units are situated at home or abroad. Equally, it is impossible to mobilize and utilize “the really crucial economic and human resources” which “must come from within” if the ideology of the “planners” mocks and denies the ideology of the people. For instance, Mr. Black expressed his own ideology in the words: “There is real hope that people will take ideology less seriously simply because they will be too busy.” Man does not live by bread alone, and the poor, having little bread, are more dependent for their life and happiness on immaterial things than are the rich. And if they are robbed of them, they lose their self-respect, their will to live, and their will to help themselves. How can they then be mobilized?

It is the impact of the West, now intensified by Westernized native ruling groups, which tends to produce this paralysis. And so, too, it produces the phenomenon which Mr. de Jouvenel refers to as “technological dualism,” but which also represents an irreconcilable division far beyond the field of technology, that splits society into “two nations,” each leading a totally different life from the other. Mr. de Jouvenel himself says: “In fact there is no difference between the situation thus arising and the situation arising in a colony with a ‘colonial’ and a ‘native’ sector”—surely the most unfortunate and destructive disease to befall the body of any nation that has only recently gained its independence. This is not, as is sometimes suggested, merely a problem of the location of industry, for even the widest possible scatter of an alien industry over the entire country could not reunite the “two nations,” but would only spread the disease.

All the most decisive problems of development may be summed up, it seems to me, in the question: “How can the impact of the West be canalized in such a way that it does not continue to throw the people into apathy and paralysis?” It is only when this question has been satisfactorily answered that we can be certain that Western aid—to render which we are in honor bound—will do more good than harm. More or better economic planning from the center provides no answer. It is only for the purposes of analysis that one can isolate the economic factor from the rest of human life. For fruitful action, the whole of man has to be recognized. If this is not done and action is based solely on economic calculations as laid down in elaborate central plans, the only possible result can be coercion from the top. But what shall it profit? If coercion succeeds, freedom is lost; stultified by apathy and sullen disdain, the people sink ever deeper into misery.

The alternative to coercion cannot be found when spiritual realities are dismissed as being of no account or treated as merely subservient to economic aims. It cannot be found when the people are considered as objects to be driven, cajoled, or manipulated. Perhaps the best—perhaps even the only—effective slogan for aid is: “Find out what the people are trying to do and help them to do it better.”

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¹ Needless to say, there are some usages that are not true traditions but decadent bad habits. The sooner these are abandoned, the better.