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Economics 3 19
ditional’ and ‘modern’ sectors, they must tackle various problems pertaining to
the theory of socio-economic formations ; moreover, much of the theoretical
background to economic development in the developing countries harks back,
sometimes unconsciously, to problems dealt with by classical economics at the
time of the industrial revolution.
The vitality of the Marxist theory of socio-economic formations, and the ur-
gent need for a general theory of development are both made evident by recent
attempts to construct rival theories that are situated somewhere between eco-
nomic history and theoretical economics. Let us start with Rostow’s theory of
the stages of economic growth.
Apart from the political intentions of the author, two serious simplifications,
as compared with the theory of Marx, may be objected to. First, it reduces
development almost entirely to quantitative changes in the forces of production,
without paying sufficient attention to the interplay of these forces with the
relations of production as between the base and the superstructure. Secondly,
it implicitly assumes that development is unilinear and hence, that stages of
development can be evaluated by such quantitative indexes as the level of the
national income or the part of it which is devoted to investmentj8 Nevertheless,
like Marxism, Rostow’s theory is nomothetical and materialistic in character.6g
Gershenkron does not seem entirely free, either, from the unilinear approach
to history, although he considers State intervention a very important strategic
variable.
As this is not the place for a detailed discussion of these theories, we shall con-
fine ourselves to the following conclusions:
Q. There is a well-defined need in economics for a general theory of develop-
ment, without which the whole structure of political economy is incomplete.
b. This general theory must be historical in character, i.e. is not feasible unless
the view is accepted that socio-economic history is a nomothetical science.
c. There are two-way links between economics and history. On the one hand,
the adequacy of economic theory must be fully tested in the light of historical
evidence (in this sense - in the apt definition of Dudley Seers - economics is the
study of economies); on the other hand, the historian’s equipment has recently
been enhanced by the achievements of economic theory. It is by asking questions
suggested by economic theory, and applying models similar to those used by
economists, that historians have been enabled to provide a new, and it might be
said, modern interpretation of the past. They put the results of their research in
a form that is more accessible to the economist and allows him, after taking all
the necessary precautions, to embark on a journey in time. With the help of
anthropologists and economic geographers, he can travel in space. This provides
the basis of the modern comparative method, the primary instrument of devel-
opment theory research.
There are also theories which remain at a lower level of generalization than
the general theory of socio-economic development but are closely connected
with it. A vast amount of research is carried out in a historical perspective on
institutions, for example. The approach in the theory of socio-economic devel-
opment is thus slightly different from the approach in the theory of the function-