John Sydenham Furnivall: An Unknown Institutionalist
Neale, Walter C., Schaniel, William C., Journal of Economic Issues
John Sydenham Furnivall was a British colonial administrator in Burma from 1900 to 1921 and then studied colonial administrations during the two decades between the world wars. Although he had never heard of American institutionalism, he arrived at a view of how third world societies had been affected by European imperialism that was so close to institutionalism that we may happily adopt him as one of us (Viar 1993). We write this note to introduce him to a wide audience of institutionalists and sympathizers.
For well over a century there has been a rarely examined assumption that economic development will increase welfare, which will then increase a people's power to control their own affairs (autonomy). In the nineteenth century the sequence was called preparing people for self-government and eventual independence. Today we commonly hear remarks to the effect, "If they establish the appropriate market institutions, then development, welfare, and democracy will follow." Furnivall argued that, contrary to this general belief, the causal sequence ran from autonomy through welfare to development (1956, 1944). (1)
In this note we emphasize three aspects of Furnivall's argument: first, the development of a model of the dysfunctional "plural societies" that often resulted from western rule in the third world; second, the argument that economic development depends upon the achievement of welfare; and third, the argument that only if the adversely affected peoples themselves have autonomy--that is, the political power to develop their own criteria of welfare--will they be able to develop economically.
Furnivall's Principles of Economic Progress
Furnivall began with the traits of what he called "tropical economy"--or what we shall call colonial economies (most of which were tropical or close to it). Furnivall postulated that there are three principles of economic progress. First, there is the survival of the cheapest (we quote at length):
Everyone would pay twopence rather than threepence for the same thing; that is rational, a matter of universal common sense....but at the same time, unless kept under control, it reduces costs by eliminating all human qualities that are not required to maintain life.
A second principle...is the desire of gain....That also is natural....Everyone ordinarily wants threepence instead of twopence....a principle that all accept as rational....It is a condition of economic progress, because it checks the tendency toward the degradation of human life inherent in the principle of survival of the cheapest....[But] the desire for gain tends to subordinate all social relationships to individual economic interest, and, unless kept under control, leads...to general impoverishment.
.... The two basic principles of economic progress are supplemented by a third: that progress is conditional on the observance of certain social obligations. These obligations are not natural, and cannot be justified by universal common sense. They can indeed be justified rationally, but only to members of the same society. (290-91, italics added)
In short, least cost and profit motive are tolerable, perhaps even admirable, only if and when they are limited by a social will that reflects the values of a society.
European conquests produced "plural societies" in which different cultural groups co-existed within the same geographical area under the same formal authorities. Furnivall called the cultural groups ethnic because, in the societies that Furnivall studied, the groups were of different gene pools; but their different cultures, not inherited traits, are the only differences to which Furnivall made reference in his argument.
Today Furnivall's choice of terminology seems confusing, but it is now built into the literature. His plural society is not a "pluralistic society" as the phrase is often used in the United States today, although the terms are related. …