The Theory of Economic Growth by W. Arthur LewisReview by: B. S. KeirsteadThe Canadian Journal of Economics and Political Science / Revue canadienne d'Economique etde Science politique, Vol. 22, No. 3 (Aug., 1956), pp. 395-397Published by: Wiley on behalf of Canadian Economics AssociationStable URL: http://www.jstor.org/stable/138451 .

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analysed. The conclusion is reached that users of highways should pay a

considerably larger proportion of highway costs than they do now. Various methods of cost allocation are examined and it is contended that such alloca- tions can be made approximately. It is comforting to find that "cost accounting in private industry successfully performs a similar task when overhead costs must be allocated against several products manufactured in the same plant" (p. 122). Possibly accountants claim too much for their tools.

The authors are quite aware of the indirect benefits of highways and of the difficulties of raising levies on highway-users; they stop short of suggesting that users pay all costs. On the basis of American experience they feel "that the motor vehicle users' share should range from about three-quarters in

provinces like Ontario ... to about 50 per cent in provinces like Newfoundland where the development of road transportation has not been so pronounced" (p. 122). In 1952 revenue from users equalled 48 per cent of all expenditures on roads and streets in Ontario, 31 per cent in Newfoundland, and 38 per cent in Canada (p. 128). Road transportation should not be subsidized to the detriment of other kinds of transportation such as railways if the nation is to allocate resources optimally.

This is a most useful book which certainly needed writing. It contains an abundance of Canadian statistical material on highways, motor vehicles,

highway expenditures, and taxes. There are 93 tables in all, 75 of which are set out in the first 84 pages. The theoretical part (chap. vmII) is thought out and written competently. There is a discussion of toll roads, leading to the conclusion that they are feasible only where traffic density is very high (chap. x). The final chapter provides a summary of the development of federal

road-grants in the United States. Anyone who is concerned with our increasing traffic problems can ill afford to ignore this book. Its emphasis on user-taxes

implies that over-all budgeting with its independence of sources of revenue

and allocations of expenditure is not desirable-highway finance, like school

or hospital or public-health finance, is different. Perhaps all we can have is a

theory of public revenue and expenditure based on social expediency-on what one writer, Margolis, calls existential social values.

E. J. HANSON

University of Alberta

The Theory of Economic Growth. By W. ARTHUR LEWIS. London: George Allen & Unwin Ltd. 1955. Pp. 453. 30s.

THIS is a brilliant, well-written, and original book, of great practical im-

portance, especially to those who wrestle with the problems of economic

development in the less fortunate countries where such development has been

arrested. It is, perhaps, a trifle ungracious, when we have been offered so much, to complain that one lays the book down with some sense of disappointment that still more was not added unto us. J. J. Spengler, in one of his reviews, refers to the vast difficulties of theorizing about economic growth or economic

development. There are, he says, far too many variables for a single mind, or

a single science, to cope with. He expresses the hope that some day some

analysed. The conclusion is reached that users of highways should pay a

considerably larger proportion of highway costs than they do now. Various methods of cost allocation are examined and it is contended that such alloca- tions can be made approximately. It is comforting to find that "cost accounting in private industry successfully performs a similar task when overhead costs must be allocated against several products manufactured in the same plant" (p. 122). Possibly accountants claim too much for their tools.

The authors are quite aware of the indirect benefits of highways and of the difficulties of raising levies on highway-users; they stop short of suggesting that users pay all costs. On the basis of American experience they feel "that the motor vehicle users' share should range from about three-quarters in

provinces like Ontario ... to about 50 per cent in provinces like Newfoundland where the development of road transportation has not been so pronounced" (p. 122). In 1952 revenue from users equalled 48 per cent of all expenditures on roads and streets in Ontario, 31 per cent in Newfoundland, and 38 per cent in Canada (p. 128). Road transportation should not be subsidized to the detriment of other kinds of transportation such as railways if the nation is to allocate resources optimally.

This is a most useful book which certainly needed writing. It contains an abundance of Canadian statistical material on highways, motor vehicles,

highway expenditures, and taxes. There are 93 tables in all, 75 of which are set out in the first 84 pages. The theoretical part (chap. vmII) is thought out and written competently. There is a discussion of toll roads, leading to the conclusion that they are feasible only where traffic density is very high (chap. x). The final chapter provides a summary of the development of federal

road-grants in the United States. Anyone who is concerned with our increasing traffic problems can ill afford to ignore this book. Its emphasis on user-taxes

implies that over-all budgeting with its independence of sources of revenue

and allocations of expenditure is not desirable-highway finance, like school

or hospital or public-health finance, is different. Perhaps all we can have is a

theory of public revenue and expenditure based on social expediency-on what one writer, Margolis, calls existential social values.

E. J. HANSON

University of Alberta

The Theory of Economic Growth. By W. ARTHUR LEWIS. London: George Allen & Unwin Ltd. 1955. Pp. 453. 30s.

THIS is a brilliant, well-written, and original book, of great practical im-

portance, especially to those who wrestle with the problems of economic

development in the less fortunate countries where such development has been

arrested. It is, perhaps, a trifle ungracious, when we have been offered so much, to complain that one lays the book down with some sense of disappointment that still more was not added unto us. J. J. Spengler, in one of his reviews, refers to the vast difficulties of theorizing about economic growth or economic

development. There are, he says, far too many variables for a single mind, or

a single science, to cope with. He expresses the hope that some day some

Reviews of Books Reviews of Books 395 395

This content downloaded from 188.72.126.55 on Sat, 14 Jun 2014 16:44:15 PMAll use subject to JSTOR Terms and Conditions

The Canadian Journal of Economics and Political Science

economist, or sociologist, or social historian will bring all these variables within one system, will reduce them, so to speak, with a great unifying hypo- thesis. This is what Professor Lewis comes so close to doing as to raise our

hopes, yet in the end, so it seemed to me, he fails. Let us not, however, emphasize the failure to achieve the near-impossible. No other writer on economic growth or development has come as close as Professor Lewis to the

pre-Raphaelite perfection of filling in, in its proper place, with proper balance, harmony, and emphasis, all the details of those psychological propensities, social institutions, and economic forces which govern or affect the processes of economic growth.

Like Adam Smith, he begins with the human propensities to achieve wealth or status and the contradictory propensities towards asceticism, leisure, and convention. He adds some illuminating passages on the classical concept of real costs and after invoking the shade of Montesquieu concludes:

These differences of attitude correspond often to differences of religion. Some religions teach that salvation, or spiritual fulfilment, is found mainly in meditation or in prayer. Others teach that it is found also or alternatively in work.... There is, nevertheless, the usual difficulty in deciding how much importance to attribute to religion in economic matters. First, there is the distinction we drew before, be- tween what a religion expects of its priests, and what it expects of its laity. If, as is so often the case, it expects its priests to pray but its laymen to work, it will diminish the community's economic effort only if it attracts excessive numbers into the priestly life.

On the whole, Professor Lewis concludes, a human propensity for material improvement is a basic spring to economic growth. This propensity, however, will operate very differently under different social institutions. The chapter on "Institutions" is a series of neatly related essays of quite extraordinary value to those who work in the so-called "underdeveloped" countries. The sections on religion and on agriculture struck me most strongly, though to his argument in the latter I should like to add a qualification. While I agree that in countries where labour is cheap and land dear, the most economic solution in the short run is to maximize yield per acre rather than yield per man, in the long run, it could be argued, the growth of per caput real income in the society could best be achieved by the creation of a food surplus, the squeezing out of dis- guised unemployment in agriculture, the maximization of yields per man, and the development of processing industries which would offer employment to those displaced by the rationalization of agriculture. Also one cannot help wondering what a Saskatchewan farmer would make of Professor Lewis'

acceptance of a farm of 300-400 acres as about the optimum size for "large- scale mechanized" farming.

After economic institutions, knowledge (including, but not exhausted by, "know-how") and then the provision of capital determine economic growth. Again the discussion is wise, sensible, roaming beyond the usual economic boundaries, but without the effect of losing contact with organized and dis-

ciplined thought. A good deal of the attention here, as in previous chapters, is to the problems of the "underdeveloped" countries, problems with which Professor Lewis is especially familiar as a former member of the United Nations group of six experts who reported on the problems of these nations.

396

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I find it hard to report on the chapter on "Capital." This requires either a

full-length review in itself, which I cannot here give, or simply the comment that in addition to being of use to those who work with the problems of the

underdeveloped countries it is also a contribution to capital theory. Of this I shall hope to say more at another time.

Professor Lewis' discussion of the role of government in economic growth, his devastating exposure of the dogmas of the "planners" and the "private enterprise boys" and the muddled nature of the supposed issue between them, his historical sense of proportion about the conditions that make for competent and incompetent administration of "crown corporations," his scepticism about the ability of corrupt administrations to administer public enterprises (few countries, he observes, have yet achieved the political maturity that produces administrations reasonably free of corruption), his detached judgment on the

alleged advantages of scale as against the alleged evils of monopoly-all these and more must win the consent and enthusiastic admiration of the reader. One must hope they will also win the considered attention of those entrusted with the responsibility of administration. I should rather our governors read and understood this book, as I reflect on "Canada's Future," than any report that can possibly result from the ablest commissioners assisted by the ablest staff, under the terms of reference of the Gordon Commission.

Perhaps I should not add this concluding note, but I should like to do so as a tribute to the scientific detachment that characterizes this book in all its

parts. Again and again, throughout the book, the necessities of the argument involve Professor Lewis, a Jamaican by birth, in discussions of such problems as the institution of slavery, the alleged handicaps of certain races, and the economic causes and effects of discrimination. In all these discussions his de- tachment exceeds anything that would be possible to the average Canadian liberal.

B. S. KEIRSTEAD

University of Toronto

The Scottish Economy: A Statistical Account of Scottish Life by Members of the Staff of Glasgow University. Edited by A. K. CAImNCROSS. Cambridge: At the University Press [Toronto: The Macmillan Company of Canada]. 1954. Pp. xvi, 320. $5.00.

THE study of the Scottish economy should be of great interest to Canadian economists. The position of Scotland has striking parallels to that of Canada. There are, of course, very important differences, but these only serve to

heighten the interest of a comparison. Scotland's cultural affinity to and rivalry with England is paralleled by the Canadian position vis-a-vis the United States. Scotland and Canada each have about one-tenth the population of their great neighbours, and each loses many of its most talented and energetic sons by emigration. Both countries depend very heavily upon export markets, and have a high degree of specialization in production. On the other hand,

I find it hard to report on the chapter on "Capital." This requires either a

full-length review in itself, which I cannot here give, or simply the comment that in addition to being of use to those who work with the problems of the

underdeveloped countries it is also a contribution to capital theory. Of this I shall hope to say more at another time.

Professor Lewis' discussion of the role of government in economic growth, his devastating exposure of the dogmas of the "planners" and the "private enterprise boys" and the muddled nature of the supposed issue between them, his historical sense of proportion about the conditions that make for competent and incompetent administration of "crown corporations," his scepticism about the ability of corrupt administrations to administer public enterprises (few countries, he observes, have yet achieved the political maturity that produces administrations reasonably free of corruption), his detached judgment on the

alleged advantages of scale as against the alleged evils of monopoly-all these and more must win the consent and enthusiastic admiration of the reader. One must hope they will also win the considered attention of those entrusted with the responsibility of administration. I should rather our governors read and understood this book, as I reflect on "Canada's Future," than any report that can possibly result from the ablest commissioners assisted by the ablest staff, under the terms of reference of the Gordon Commission.

Perhaps I should not add this concluding note, but I should like to do so as a tribute to the scientific detachment that characterizes this book in all its

parts. Again and again, throughout the book, the necessities of the argument involve Professor Lewis, a Jamaican by birth, in discussions of such problems as the institution of slavery, the alleged handicaps of certain races, and the economic causes and effects of discrimination. In all these discussions his de- tachment exceeds anything that would be possible to the average Canadian liberal.

B. S. KEIRSTEAD

University of Toronto

The Scottish Economy: A Statistical Account of Scottish Life by Members of the Staff of Glasgow University. Edited by A. K. CAImNCROSS. Cambridge: At the University Press [Toronto: The Macmillan Company of Canada]. 1954. Pp. xvi, 320. $5.00.

THE study of the Scottish economy should be of great interest to Canadian economists. The position of Scotland has striking parallels to that of Canada. There are, of course, very important differences, but these only serve to

heighten the interest of a comparison. Scotland's cultural affinity to and rivalry with England is paralleled by the Canadian position vis-a-vis the United States. Scotland and Canada each have about one-tenth the population of their great neighbours, and each loses many of its most talented and energetic sons by emigration. Both countries depend very heavily upon export markets, and have a high degree of specialization in production. On the other hand,

Reviews of Books Reviews of Books 397 397

This content downloaded from 188.72.126.55 on Sat, 14 Jun 2014 16:44:15 PMAll use subject to JSTOR Terms and Conditions