The Economic Surplus: Theory, Measurement, Applications

By Anders Danielson | Go to book overview

8
Is Surplus Obsolete?

Although surplus constituted a core concept in economic theory from the Physiocrats until the height of Classical Political Economy, it went into obscurity with the rise to dominance of neoclassical theory. Despite the facty that some signs of revival for surplus became visible after the Second World War, it would probably not be unfair to paraphrase Keynes in saying that the concept of surplus has only lived on, furtively, below the surface, in the underworlds of Piero Sraffa or Paul Baran.

Although recent surplus approaches have most often been associated with dissatisfaction with contemporary mainstream theory, this is, of course not a necessary condition for using the concept. As the present work has attempted to demonstrate, it is perfectly possible to construct a surplus concept that can be used in harmony with (in this case) development theory.

To claim that "surplus"--unless it is juxtaposed with Marshallian consumer or producer surplus--is simply a reflection of underlying market imperfections is to gravely misunderstand the concept--at least as it has been used in this study. As has been repeatedly stated, it is all a matter of definitions. Pick your choice of output--national income, gross national product, net domestic product. Take one part of that and call it "subsistence." Then the remainder is called "surplus." A basic problem in this approach is not to "prove" the existence of a surplus, but to choose "subsistence" in a manner compatible with economic theory. In this work, "subsistence" relies on the Lewis model of the dual economy; it thus seems as if it would be difficult to claim that the basis of this definition dwells in the underworlds of theory, far from accepted truth or established doctrines.

The significance of a concept derived from an identity depends of course on the object of study. Although "surplus" measures something that is not measured by "consumption" or "output," it is not necessarily superior to these. It depends on the questions asked. Surely, if total annual income in an economy

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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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