The Economic Surplus: Theory, Measurement, Applications

By Anders Danielson | Go to book overview

the manufacturing sector and thereby speed up industrialization. As seen in this chapter, however, the agricultural surplus in the pure peasant economy is not easy for rulers to extract and control for farmers may respond to attempts at extraction by simply turning food into leisure and thereby rendering it even more difficult for rulers to get a piece of the pie.

The chapters that follow takes a close look at one economy in which fiscal policies illustrate very well the points made here. Analyzing Jamaica under the leadership of Michael Manley ( 1972-80) reveals that Manley's attempts of turning the distribution of the surplus in favor of certain groups severely damaged the prospects for economic growth in Jamaica--an economy whose performance in the 1960s was often described in terms of "success" and "miracle."


NOTES
1.
See Lewis ( 1988) for evidence that this is true especially for development economics and Mankiw ( 1990, 1646- 1647) for a similar argument regarding modern macroeconomics.
2.
A more detailed description of the workings of a SAM is provided in the collection edited by Pyatt and Round ( 1985) and in particular by King ( 1985). Note also that the Tableau Économique, as discussed in Chapter 2 may be interpreted as a SAM, since it focuses on the links between the structure of production and the distribution of income (Stone, 1985, Appendix).
3.
This is so unless one works with imputed wages--something that demands that the opportunity cost can be defined. In a pure peasant economy, this is, as shall be seen, a purely subjective concept.
4.
That is, it is assumed that the existing techniques are sufficient in number to make the composite function imitate a well-behaved production function. The continuity assumption is made for expositional convenience. As has been demonstrated by, for example, Findlay ( 1973, Ch. 6), if it is assumed instead that isoquants are discontinuous between Φ1 and Φ2, the major results of the analysis are not affected. Basically, not assuming continuity results in the possibility that the family will use two production techniques simultaneously arises. This, however, adds nothing substantial to the analysis.
5.
The well-known problems regarding inter-personal comparisons of utility are ignored. There are two principal ways of avoiding this problem. First, it can be assumed that all members of a given household have identical tastes and utility functions. Second, it might be assumed that one person in the household--the household dictator--takes all decisions. It is also possible to ignore the problem completely by following Sen ( 1966, 426) who assumes that "peasants have not heard of difficulties of interpersonal comparisons of utility and make such comparisons blatantly."

-61-

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The Economic Surplus: Theory, Measurement, Applications
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Figure and Tables ix
  • Acknowledgments xi
  • I - Introduction 1
  • 1: Surplus and Economic Development 3
  • II - Theory and Measurement 11
  • 2 - The Role of Surplus in Classical Political Economy 13
  • Notes 27
  • 3 - Making Surplus Visible: A National Accounts Approach 29
  • Notes 43
  • 4 - Accumulation and the Agricultural Surplus 47
  • Notes 61
  • III - An Application: Jamaica under Manley 63
  • 5 - Size and Distribution of the Surplus 65
  • APPENDIX TO CHAPTER 5: SOURCES AND QUALITY OF DATA 78
  • APPENDIX TO CHAPTER 5: SOURCES AND QUALITY OF DATA 79
  • Mechanisms of Stagnation 81
  • APPENDIX TO CHAPTER 6: SURPLUS ACROSS COUNTRIES AND OVER TIME 92
  • 7 - The Role of Interest Groups 101
  • Notes 123
  • IV - Concluding Observations 127
  • 8: Is Surplus Obsolete? 129
  • References 137
  • Index 147
  • About the Author 153
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