On the Political Economy of Backwardness

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Paul Baran, “On the Political Economy of Backwardness,” The Manchester School of Economy and Social Studies, January, 1952, V.XX, No. 1: 66-84. On t he Political Economy of Backwardness I T he capitalist mode of production and the social and political order concomitant with it provided, during the latter part of the eighteenth century, and still more during the entire nineteenth century, a framework for a continuous and, in spite of cyclical disturbafices a nd setbacks, momentous expansion of productivity and material welfare. The relevant facts are well known and call for no elaboration. Yet this material (and cultural) progress was not only spotty in time but most unevenly distributed in space. I t was confined to the Western world ; a nd did not affect even all of this territorially and demographically relatively small sector of the inhabited globe. Germany and Austria, Britain and France, some smaller countries in Western Europe, and the United States and Canada occupied places in the neighbourhood of the sun. The vast exeanses a nd the multitude of inhabitants of Eastern Europe, Spain and Portugal, Italy and the Balkans, Latin America and Asia, not to speak of Africa, remained in the deep shadow of backwardness and squalor, of stagnation and misery. Tardy and skimpy as the benefits of capitalism may have been with respect to the lower classes even in most of the leading industrial countries, they were all but negligible in the less privileged parts of the world. There productivity remained low, and rapid increases in population pushed living standards from bad to worse. The dreams of the prophets of capitalist harmony remained on paper. Capital either did not move from countries where its marginal productivity was iow to countries where it could be expected to be high, or if it did, it moved there mainly in order to extract
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