George Argyrous

Cumulative Causation and Industrial Evolution: Kaldor’s Four Stages of Industrialization as an Evolutionary Model

Kaldor, who built on the work of Allyn Young. 1 Kaldor argued that industrialization is a cumulative process in which the development of industries producing consumer goods precedes the development of those producing capital goods, and where production for sale precedes production for export. Kaldors theory has had an important influence on other writers in the Cambridge, England, tradition [Eatwell 1982; Skott 1985]. The notion of cumulative causation, through its origins in the writings of Thorstein Veblen [1898] and in the subsequent work of Gunnar Myrdal [1944, 1968], has also permeated the work of institutionalist authors.2 Despite the use of a common theoretical term, however, important differences between the Young/Kaldor and the Veblen/Myrdal versions exist that have not been fully explored. In particular, Kaldor provides a taxonomy for investigating the industrial development of individual countries. However, without a discussion of the process by which a country moves from one stage to another, this taxonomy retains mechanistic overtones of inexorable, linear development. This is contrary to the evolutionary spirit with which the Veblen/Myrdal stream develops the notion of cumulative causation. The task of this paper is to reconcile these two streams of thinking. Kaldors four-stage model of industrial development is used and supplemented with other work that provides a more complete explanation of the industrialization process. Drawing on literature that emphasizes learning-by-using and the historical development of consumption patterns, Kaldors four-stage model can be given evolutionary

Labor Market Disability: Implications for the Unemployment Rate

This paper investigates the extent to which unemployment, particularly among older males, is hidden by the welfare system. It is argued that the official unemployment rate has fallen because of a decline in participation rates among older males since 1972, and a significant proportion of these can be accounted for by the increase in the percentage of males receiving the Disability Support Pension and the Mature Age Allowance. These males are considered the Labor Market Disabled, since the principal cause of them being on welfare is the weakness of the labor market in which they have traditionally found employment. The unemployment rate is then reconsidered after including the LMD into the calculation, producing a more pronounced hysteresis affect over successive business cycles. It is argued that active job creation programs are required to move these people from welfare to work.

Kuhn's Paradigms and Neoclassical Economics

Thirty years after its publication, Thomas Kuhns The Structure of Scientific Revolutions is still the source of much discussion in economics. Its rel-ativistic tone has often been used to fuel the claims of dissident traditions against the prevailing orthodoxy, or at least to plead the case for intellectual pluralism (Dow, 1985). Through his arguments regarding the incommensurability of different theoretical approaches to a particular subject, Kuhns work has allowed many to argue that dissident traditions are just as legitimate as orthodoxy for analyzing a subject, since there is no objective or independent means of arbitrating between them. This has caused an opposing response by those more supportive of the prevailing theoretical approach to economics. The latter have tried to find a defense to relativist challenges in more “rational” philosophies of science, such as that of Lakatos (Blaug, 1975).

Can Expenditure Cuts Eliminate a Budget Deficit? The Australian Experience

Australia Governments since the late 1970s have attempted to eliminate the fiscal deficit through reductions in expenditure. These efforts have failed. With each successive business cycle the Federal Governments budget outcome has been an ever growing deficit. This paper explains the failure of the government to achieve its balanced budget objective through expenditure reductions. It argues that the impact of these expenditure reductions on the course of the business cycle and the long term development of the economy has actually fed back onto the budget outcome in a negative way. These feedbacks have rendered the instruments for achieving its policy objective self-defeating. The paper explores the compositional changes in government outlays, away from capital to current outlays, that have resulted from this policy objective and which may have a detrimental effect on long run growth.

Social cost-benefit analysis in Australia and New Zealand. The state of current practice and what needs to be done

Overview All is not well with the evaluation of government programs and projects. Resources available to any society are limited. If governments are to increase the well-being of their citizens, they must be able to select and implement the socially most beneficial projects and policies. But many government agencies lack the expertise to carry out a cost-benefit analysis, or even to commission one. Commercial consultants, on the other hand, often have some analytical expertise, but are not immune from adopting approaches that accommodate the proclivities of their client agencies. In order to increase analytical rigour and methodological consistency, this publication urges the adoption of a ‘belts and braces’ set of protocols for use in project evaluation.

Structural Adjustment Issues in Papua New Guinea

Poor economic performance and the Bougainville mine closure have focused attention in PNG on the appropriate stabilization package and micro policies necessary to improve the countrys economic prospects. A package of structural adjustment “reforms”, strongly supported by the IMF and World Bank, have been introduced. This paper examines the applicability and desireability of implementing these “reforms”. Our paper suggests that PNG might profitably explore some alternative development options to the ones currently in vogue.

Commissioning Human Services: Lessons from Australian Convict Contracting

The transportation of convicts to the British penal colony at New South Wales in the late 18th and early 19th centuries was largely undertaken by private merchants under contract to government. In the early years, the outcomes of this system, as measured by mortality rates, were mixed, but by the turn of the century, public officials had refined its operation, resulting in a significant decline in convict deaths. Close study of the evolution of this system reveals that government officials were grappling with many of the same issues encountered by public service commissioners today – trade-offs between price and quality, the use of transactional versus relational contracting forms, and heavy reliance on financial incentives as opposed to intrinsic motivation. Governments success in reducing mortality on the convict ships highlights the importance of system design, effective monitoring and management when public services are delivered under contract.

Transformational Growth, Endogenous Demand, and a Developmental ELR Program

Both neoclassical and post-Keynesian growth theory fails to explain the determinants of the growth of demand. Historically, the growth of demand has depended on the changing structure of social classes, which in turn is also a key to the growth of productivity. Understanding this makes it possible to develop a simple theory in which the growth of demand is endogenous, and interacts with capital intensity, productivity, and relative shares. By defining a distinction between “collective” goods and “personal” goods, this model can be extended further to include the growth of government. Moreover, the Employer of Last Resort (ELR), which has hitherto been considered a countercyclical policy, can now be extended to questions of development, in economies in which there is a shortage of capital. The paper closes with comments on the limitations of theories of endogenous demand growth.

Introduction to measures of association

We have previously made the general point that statistical significance and theoretical or practical significance are not the same. We may, for example, find a relationship between age and exam grades. However, the mere fact that there is a difference in exam scores between age groups gives no guidance as to whether the relationship between these variables is very strong or very weak. Should it warrant running separate classes for students in different age groups? Does it justify a change in the current thinking about education and cognitive skills? Tests of significance do not help much in answering such questions. They do not measure the strength of a relationship, but rather indicate whether a relationship between two variables exists in the population. Measures of association, on the other hand, are designed to provide such information.

Basic tools of description: Tables

Tolstoy’s War and Peace is a very long book. It would not be possible to do such a book justice in any way other than to read it from cover to cover. However, this takes a lot of time and concentration, each of which may not be readily available. If we want to simply get a gist of the story, a shorter summary is adequate. A summary reduces the thousands of words that make up the original book down to a few hundred, while (hopefully) retaining some of the essence of the story. Of course, the summary will leave out a great deal, and the way the book is summarized for one purpose will be different from the way it is summarized for another. Nevertheless, although much is lost, something is also gained when a book so large is summarized effectively.