DUALISM SOCIAL AND TECHNOLOGICAL Introduction Under developed economies of

DUALISM–SOCIAL AND TECHNOLOGICAL Introduction Under developed economies of today are dual economics. It implies the co-existence of a small developed sector and a vast ‘traditionally backward sector’. In the developed sector modern techniques are used while the backward sector survives largely on the conventional techniques of production. the dual functioning of the economies of the countries is what known as ‘economic dualism’. This highlight 2 basic phenomena in the context of less develop economies. 1. theories of growth or models of development as evolved in developed nation are not applicable for the less developed countries 2. a uniform policy of development cannot be adopted across all sectors of less developed economies.

MEANING OF DUALISM • In the words of prof. Higgins, ‘dualism means existence of two distinct sectors in underdeveloped economy. A modern commercialise industrial sector developed alongside a traditional subsistence agricultural sector. • Dualism is the characteristics feature of less developed countries. In these countries there exists on the other hand a backward traditional sector, also called subsistence sector. Agriculture is the principle occupation of the sector. Machines and money are used only to a limited extent. Technique of production is backward. On the other hand, there exists a modern sector also called capitalist sector. Development in the sector depends largely upon external assistance and control. Industry and mining are the principal occupation of this sector. Modern techniques with intensive application of capital is a common characteristic of the system of production in this sector. Production is largely for exchange. However, compare to the subsistence sector , the modern industrial sector of the less developed countries is very small.

THEORIES OF DUALISM • Economists like Higgins and Boeke are of the opinion that dualism in less developed countries has been the principle constraint in their growth process. There are 2 basic theories in this context: • 1. social dualism • 2. technical dualism

SOCIAL DUALISM • • Dutch economist J. S. Boeke propounded the concept of dualism. He based his theory on his observations of Indonesian economy. He believed that from the economic point of view, a society may be classified on the basis of 3 basic characteristics 1. social spirit 2. organisational forms 3. types of techniques If all the characteristics are uniform across all sectors of the economy , it should be a homogenous economy in contrast if these characteristics are diverse across different sector of an economy it should be characterised by social dualism. Professor Boeke is of the opinion that social dualism has provided to be a hindrance in the process of growth of less developed countries.

MEANING OF SOCIAL DUALISM • In the words of professor Boeke, ’’ social dualism is the clashing of an imported social system with an indigenous social system of another style. Most frequently the imported social system is high capitalism. But it may be socialism or communism just as well or blending of them’’ • Prof. Boeke uses ‘east’ and ‘west’ as different expressions for the underdeveloped or dual economies and developed capitalist economies, respectively. Underdeveloped economies of the east are generally underdeveloped economiests. co-existence of 2 diverse social orders is the principal properties of such economies. Social dualism thus is kind of social disintegration caused by the rise of capitalism in less developed economies. This integration points ti the conflicts between the imported social order and the indigenous social order of the underdeveloped economies.

FEATURES OF SOCIAL DUALISM • • • 1. Limited needs: limited needs of the people is the foremost property of the dual economies. Exchange is limited and there is limited use of money. production is largely self-subsistence. Because of the limited wants, there is no compulsion or motivation to work money. The supply curve of labour is thus generally backward-sloping in these economies. This implies that in response to rise in wages beyond a particular point the supply of labour starts diminishing, rather than increasing. 2. more importants of social needs: in the dual economies people attach more importance ton their social needs. social perspective is of greater importance than the national perspective. In the words of prof. Boeke, ’’ it is not their economic usefulness or the individual services they render their possesor which determine the value of goods. It is what the community thinks of the commodities that give them value. ’’ 3. importance to self sufficiency: under social dualism, household prefer to be selfsufficient. That is, they would desire to be as less sdependent upon others as possible for the satisfactions of their wants. Thus, exchange, monetization and specialization remain dormant in these economies. Production is largely effected on small scale without any complex technique of production. 4. lack of profit motive: yet another feature of the economies of ‘east’ is that production is not done for the profit motive. Thus the modern theories of business enterprise do not hold good in these economies. Windfal profits and loses are attached greater significance in these economies. 5. lack of organization : Boeke asserts ‘lack of organisation as an important property of the economies of the east. Because of the lack enterpreneurship people are wary of undertaking business risks. Fatalism is preferred to organised and systematic efforts. Thus writes prof. Boeke , ’’ the oriental is , unfortunately , totally lacking in organising power where modern western enterprises are concern. Where western industry is dominated by commonsense reason, eastern society moulded by fatalism and resignation.

IMPLICATIONS OF SOCIAL DUALISM • • • 1. non-applicability of the principles of developed economies in underdeveloped economies. The difference between the economies of ‘east’ and ‘west’ is so large that the principles of the ‘west’are not applicable to the ‘east’. principles of the west are generally based upon unlimited wants, extensive use of money and profit motives of production. None of these features are found in the ‘east’. Boeke says, ‘’we shall do well, not to transport the tender, delicate and hot house plants of western theory to tropical soil, where an easy death awaits them. ’’ 2. pessimistic: Boeke’s theory pushes the economy of the ‘east’ into the realm of pessimism. None of theories of growth the western developed economies are supposed to be applicable in the context of the underdeveloped socially dual economies of the ‘east’. in the words of prof. Boeke, ‘’ farmers of the east neither desire nor are capable adopting developed techniques of their western counter parts. Only their conventional wisdom is found to be more suitable in these economies. Because the residents of these economies are generally averse to change, they do not opt for improve and scientific techniques of productions. ’’ 3. traditional nature of organisation : compared to modern complex organisationalstructure of the western economies , one finds only traditional organisational set up in the east. As a result , industries , mines and plantations are not efficientlfy manage , and therefore renmaibn under developed. Perhaps the principal costs of it is the insignificant exuistence of the middle class in these economies.

• 4. lack of technological development: there is a lack of technological development in underdeveloped economies of the west. An enterprise of the east fails to compete with his western counter part because development of modern techniques is very expensive and beyond his means. Also, people of the eastern economist are not prepared to exert more for additional incomes. so they are averse to the adoption of new techniques. technically. , therefore, these economies remain to be backward economies. • 5. unemployment: Prof. Boeke points out the existence of 4 types of unemployment in less developed dual economies: 1 seasonal unemployment 2. unemployment of casual workers. These include those workers who migrate from rural areas to work in plantations, mining and such other ocuppations 3. unemployment of urban white collar workers, 4. unemployment among eurasians. Prof. Boeke is of the opinion that the government in these countries is incapable of removing of unemployment because of the limited resourses. unemp; loyment in the east cannot be removed by adopting theories of employment of the west. • 6. nature of labour: most of the workers in the dual economies are casual workers. This is because of excess poverty, illiteracy and acute sense of fatalism in thesen countries. People are generally inert , unorganized and unprogressive. They accept poverty and unemployment simply as acurse of nature and seldom strive for better living.

CONCLUSION • In short, according to theory of social dualism, less developed economies are dual economies. Consequently, solution of their problems is not possible on the basis of theories of growth and developed nations. Prof. Boeke is of the opinion that developed nations would render a great service if they leave the less developed countries alone for their development. Any effort to help the less developed countries by adopting their own programmes and policieswould only push them further behind. Infact for the dual and diverse economies their should be dualistic theories of growth, as only that any true analysis of the 2 opposite social orders would be possible.

• • • CRITICISM 1. needs are not limited: prof. Higgins writes that Boeke’s contention that people have limited needs and less developed countries is not correct. The fact is that the marginal propensity to consume an importof the people in developing countries is very high. As a result, the government in these countries is always confronted with the problem of meetin growing requirements of the people. Higgins also questios the validity of Boeke’s contention that the supply curve of labour in developing economies is backward slopping. 2. dualism is not particular to eastern economies : dualism is not the exclusive property of less developed countries. Higgins says, ’’even in the most advance countries such as Italy, Canada, United states, there areas where techniques lag behind those of the most advance sectors and in which standards of economic and social welfare correspondingly ‘’. In all economies of the world there is dualism. 3. unrealistic view of the nature of the labour ; the critique also points that Boeke’s theory takes an unrealistics view of the nature of labour in less developed countries. It is wrong to say that labour in these economies is casual and unorganized. These endeavour to protect the interest of workers and promote their welfare. Even in Indonesia, on the experiences of which Boeke founded this theory, there are trade unions. These unions are spreading their activities fast for the welfare of the working classes. 4. Increasing trend towards urbanisation: prof. Higgins also denounced Boeke’s opinion that workers in less developed countries are less mobile and that they do not migrate to the urban areas from their rural homelands. In the words of prof. Higgins, ’’ in part urban life of the larger cities with its cinemas , cafes, shops, librariesand sports events have proved attractive to villagers to grt a taste of it. 5. unrealistic concept of specific characteristics Boeke’s contention that there are certain specific characteristic if less developed dual economies is also wrong. infact, such characteristic are common to all the countries, developed or underdeveloped. Many characteristic of the east are fairyly common in the west. For eg, the tendency to make speculative gains during periods of chronic dedepressi common both in developed as well as underdeveloped countries. Likewise thje tendency to minimise risk is not a specific characteristic of less developed countries.

TECHNICAL DUALISM Prof. Higgins has propounded the concept of technical dualism in place of social dualism. 1. Meaning of technological dualism: in the words of prof Higgins, ’’ dualism is the situation in which productive employment opportunities are limited not because of effective demand, but because of resourse and technological constraint in the 2 sectors. ’’prof Higgins is of the opinion that different resource endowment and production function across the traditional and modern sectors of the less developed economies is the fundamental basis of the technological dualism ih these economies. 2. characteristic of the dual sector: A. features of the traditional sector: 1. agriculture, cottage and small industries including handicrafts are the principal occupation of this sector. 2 different techniques and different combinations of labour and capital are often employed in this sector. thus , technical coefficient of production is highly variable in the sector. 3. compare to capital, labour is often more intensely utilized in the process of production. That is, the process of production is dominated by the labour intensive technique of production.

B. Features of modern sector • • 1. this sector includes industries, plantations, transport and related activities as its principle occupations. 2. there is a limited scope of technical substitutability of factors of production. accordingly, technical coefficient of production remains generally fixed. 3. compare to labour, more of capital is utilised. Thus, the process of productions is dominated by capital intensive technique of production. 4. besides labour and financial capital, developed land also constitutes a major resource ofproductions in this sector.

3. Explanation of technical dualism • • • 1. differences in factor-endowment-difference in the availabity of capital and labour is one of the two fundamental basis of technical dualism. the traditional sector of the dual economies is generally characterised by the abundance of labour but also shortage of capital. So, production techniques are often labour intensive in the sector. In contrast, in the modern sector, more of capital compared to labour is generally observed. Thus, almost 2 distinct techniques of production are found to exist across two different sectors of dual economies. 2. difference in production function – difference in production function is the second fundamental basis of technical dualism. While there are fixed coefficients of production function in the modern sector, these are often variable in the traditional sector. Higgins analysis this duality in the context of ‘factor proportions. ’ Eckaus offers a detailed explanations of this feature of less developed countries. Technological dualism suggest that the existence of vast unemployment in less developed economies is not due to the lack of effective dimand but owing to the resource constraint as well as technological backwardness. As regards resource utilization, the less developed countries have severe structural imbalances-1. one finds different coefficient of the same factor in its alternative usage 2. the price structure is compatible with resource supply. Thus professors Eckaus is of the opinion that the problem of unemployment is generated owing to

• • • 1. incompleteness of price management and 2. surplus of labour owing to thetechnical as well as demand constraints. Prof. Higgins demonstrates through fig 1. below the existence unemployment in less developed dual economies 1. there are 2 sectors of economy a) traditional sector b) modern sector 2. there are two factors of production a) capital b)labour 3. two commodities are produced

• • • The figure shows on labour on x-axis and capital on Y-axis. Q 1, Q 2, Q 3, Q 4 are different isoquant curves. An isoquant shows different combination of capital and labour to produced a given amount of output. Thus an isoquant which is to the right and aboveanother isoquant represents relatively higher level of output. The figure is based on the assumtions of fixed technical coefficient of production. technique of production is capital intensive, that is more of capital is use compare to labour. EO shows the expansion path. Figure shows that Okunits of capital and OL units of labour are used to produced OQ(100 units) ofoutput. If OL 1 units of labour and OK 1 units of capital are actually available LL 1 units of labour would remain an unemployed as the ratio between labour and capital used as inputs is fixed(OL plus OK) if the availabilaty of capital increases, the producer would shift on to a higher isoquant curve showing higher level of output. According to Higgins unemployed labour in the industrial sector is left with no option other than seeking employment in the rural sectorof the economy. technical co- efficient of production can be change in the rural areas facilating that absorption of labour with still greater application of labour intensivetechniques of production but this reduces the marginal productivity of labour even to the zero level causing the problem of disguise unemployment in the rural areas of less developed countries.

CRITICAL EVALUATION • • • Compare to Boeke’s theory of social dualism, Higgins concept of technological dualism is undoubtedly more realistic. The Higgins theory was very clearly explains how unemployment as well as under employment emerge in less developed countries owing to the process of industrialisation and technical progress. the solution of unemployment problem lies in accelerating the process of domestic capitals formation. Higgins theory is not free from criticism. Following observation may be noted in this regard 1. theory explains the emergence of underemployment in the traditional sector of developing economies, but does not offer any solution thereof. 2. theory is based on a questionable assumption that the technical coefficient of production is fixed in the modern sector of the underdeveloped economies. Alittle degree of elasticity cannot be ruled in any production function. 3. Higgins attaches importance only to the technical factors affecting the ratio between the labour and capital. The theory is thus lopsided. 4. Prof. Higgins fails to offer a comprehehensive explanation of nature and growth of unemployment in the traditional sector of dual economies. 5. it is also questionable to assume that development of industrial sector in underdeveloped economies depends entirely upon imported technology.