The facts that explain the key differences in the structure and the means of production among the countries that have been growing and adding to our knowledge of the conditions and sources of poverty in the world , but do not add much to our understanding of how poverty this may arise or how to handle it best . To answer these questions , it should be examined how economic development was taking place . Economic development can best be viewed as a process that ongoing . The changes in a series of factors can cause changes in the sequences of other variables , and so on can cause an increase in the per capita income . The process was not then have to stop it at that . An increase in income can lead to new impulses that ultimately will bring another rise due to increasing per capita income . The problem , both for those who want to predict the exact per capita income in the future as well as for those who want to outline policies to accelerate development , is to find the variables and key relationships in the development process .
Development theories are great and the last 200 years , and its main contributions after World War II , will be described and assessed in magnitude . These theories contain basic principles that turned out to be of great importance in the aspects of historical experience and political influence . Despite theories that usually can not be directly applied to the developing world today, each existing theories emphasize one particular relationship that is very important to understand the processes that the main growth in developing countries today .
Similarities that exist between the various theories that will be discussed in advance , which includes the period from and classical writers until the time after Keynes , is penitikberatannya on capital formation as a process that is crucial in economic development . All theories mi trying to understand better the process of capital accumulation and economic factors that stimulate or inhibit capital formation . Pikiranpara kiasik economists and neo – classical and Marx in relation to the achievement of the objectives mi. As will be seen , the analysis and the classical economists very prominent because it shows how economic development can be thwarted by population pressures coupled with the scarcity of natural resources . Donations and neo – classical writers , on the other hand , is very meaningful because penyempumaan classical economic theory in analyzing the process of savings and investment and in treading the effects of inter- sector and development . In contrast to Marx , the neo – classical writers also put pressure on balk influences and technological advances . Marx argued that the relationships between production associated with capitalism can not be equated with technological advances generated under the system and that as a result of capitalism always be plagued by periodic periods of depression that will ultimately lead to economic stagnation . Tenlepas and truth of these views , Marx’s analysis is very useful to show the development costs which are often very expensive because of the shock – shock social and economic .
I. CLASSICAL VIEWS .
It is no doubt that the most famous names in the world of economics is Adam Smith . An observation about the nature and causes of Wealth of Nations (1776 ) 1 ) , has a lot of influence both thinkers and policy-makers . Such as turns and title, the attention Smith primarily located in the economic development problems . He wanted to discover how the economy can emerge pentumbuhan and the facts and policies that influence what .
A. The Division of Labour and Cumulative Growth .
According to Smith , the Work -sharing is the key to improving productivity . If the workers specializing in activities to a particular course and no longer perform some tasks of production , then with the same effort that they will collectively produce more . However, before the division of labor can be done on a large scale , it first needs to be held as capital raising by labor specialization generally involves the use of machinery and equipment – specific equipment . Hence the Smith emphasized the ability and the willingness of people to save as an essential condition for economic growth .
Other restrictions on the division of labor is the magnitude of the market . If the market value is too small , then the request will not be enough to absorb the goods are made by mass production methods . Raise the income level brings a tendency to expand the market for most commodities ; also , new buyers can be sought in other countries . As said Smith about the discovery of America : ” By opening new markets and never saturated for all the commodities of Europe , there arose widespread division of labor as well as improvements in the way of working , in the last regular trade limitations will never be able to emerge because lack of market to absorb some of the largest and results . ”
Once the development goes , then the sequel will usually run alone . If only there was little initial capital stock and the marketing possibilities are sufficient , then the division of labor and specialization will arise and national income will increase . The increase in revenue will not only open up a new market , but also a source for savings and greater investment . And this will prepare the state for division of labor and revenue growth further . Another advantage and division of labor is increasing emergence of new ideas and better to make commodities . Capital stock is made possible by the division of labor and specialization before then taking the form of machinery and equipment more perfect .
Is there a limit in the cumulative process of development ? Sayanglah that the limit exists , said Smith . This will occur when an economic system has reached ” full richness made possible by the nature of the soil and climate as well as the situation of the other states to be achieved ” . Smith is not very clear in explaining how this silent position will ultimately be achieved , but the factors that will eventually stop the growth is again the lack of natural resources . With a more mature economic system through capital formation and population growth , then the more difficult for him to overcome obstacles nintangan – natural resources . The levels of return on capital will decline until eventually no more stimulus or a means to raise capital further .
B. Models Ricardo
David Ricardo , perhaps the most brilliant among economists kiasik , which explains bagaimanakab congestion is eventually going to hit all the systems view of Ricardo’s economic development is a picture of where the difficulty increases sem akin to provide food for the population of the enlarged inakin will eventually stop the growth process . teoni mi is a very simple but fairly complete , with the very real relevance to the developing countries with a very dense population .
Ricardo model contains three major economic groups of capitalists , workers and landlords . Capitalists are those who direct and – with – profits saving ketuntungannya – start the development process . During the earnings level is above a certain minimum , almost at zero level , then they will continue to save and accumulate capital . The largest group , the pekeija , do not have any means of production but use alatalatnya provided by the capitalists . The size of the labor force varies , depending on the level of wages . According to Ricardo , there is a level of real wages that are ” natural ” , created by custom and habit , in which the working population will not increase or decrease . If wages rise up above the level of noodles , then a decrease in mortality due sebagal more nutritious foods and health standards higher will bring a rise in the number of the population . Conversely , if the real upahupah level drops below the ” natural ” , then the deaths will exceed births and the population will decrease .
The latter group is the landlord class , ie those who have a supply of land that never changes and that can attract the rent for its use . Rent on each unit of land that wears a certain amount of labor and capital is equal to the difference between the proceeds and what is produced in the land acquisition and the results that can be generated by the amount of labor and capital are the same in most low -quality soil used . Soil types will last mi basically a form of free land by any capitalist can be used without paying the rent . As a result , it is the landlords who own the land that can produce more and what is produced on marginal land such as a lease would be an interesting difference in the results between the marginal and intra – marginal land in the competitive bidding among kapitalls to gain ground better .
C. The state of Silence .
Such as Adam Smith , Ricardo saw it as a growth process can evolve itself – until a certain point . To start the process , then the rate of profit must be positive . mi will stimulate the capitalists to save the majority and incomes . Balk the landlords and the workers spend all of their income , according to Ricardo , that the capitalists hold a crucial role in the growth process . With investment funds , then the capitalists tried to broaden the results with rnengupah more workers and buy more equipment . mi push real wages up above the natural rate , at least for a while. However , wage increases due to decreased mortality brings and , not long after, an increase in the labor force . mi tends to suppress further back wages . But if those resources are abundant and high profit levels , it is possible that capital formation will take place so quickly that real wages remain high for a long period of time .
However, with the growing population of the lands which the poorer began work to meet growing food needs . Rent on land that was better quality will increase and absorb the larger part and the results obtained and tanahtanah mi. Remaining money to be used by the capitalists and the pekeija thus be reduced . Degree of profit – ago levels menururi and wages began to move to natural levels . During the earnings level is still above zero , then the capital continue to raise money and thus population growth while maintaining motion . But in the end the scarcity of arable lands into an obstacle that can not be skipped . mi will occur at the time the results and something units of labor and capital used in the poorest land acquisition which resulted in just enough to cover the natural wages of the workers involved . Nothing else is left for capital and thus also no longer any inducement or means for further capital raising . The same thing happens in soils more fertile . Rent absorb the difference between the overall results and the lands and natural wage of labor used . Then came the motionless state positions ; spiders to zero ( or nearly zero ) ; real wages are at the level of the minimum natural and very high rents .
The main strength to fight the end result is pessimistic mi – penyempumaan improvement in agriculture in order to take advantage of the need for land most infertile may be delayed . Such technological advances will happen occasionally as well , but according to Ricardo is not fast enough to be able to move the state menghalanghalangi ultimately be achieved as well . Another important way out anyway and the state of international trade is a kind of noodle . Industrialized countries specializing in the manufacture din goods and the import of cheap food ingredients and developing countries that are rich in land still will be able to delay the arrival of the consequences and resource – limited natural resources .
Little or a lot MI means that no one can ever professed wisdom of a nation to avoid congestion at the arrival end . We may think that the economists kiasik certainly raised his hands in despair facing the prospect of such mi. But it seems they never looked like this fatalistic economic development . The state of silence is going to arrive at a han , so their views , but in fact they can always just find appropriate measures to postpone it . All of these policy recommendations revolve around the limitation to a minimum of government interference . Ricardo , like other kiasik writers , believe that almost all of the tax will eventually collide with the benefits that will relax their level of economic development . Or , conversely , if the owners of capital are given maximum flexibility to make a profit , he estimated that the hand of the price mechanism invisible to properly distribute those resources are tensedia and act delay as long as possible the arrival of a state without the motion, provided it does not there is monopoly positions .
II . GROWTH CAPITAL FORMATION THROUGH SERASI
AND TECHNOLOGICAL PROGRESS – MODEL NEO – CLASSICAL
bagian dunia yang lebih maju di akhir abad kedelapanbelas serta abad kesembilanbelas.”>Sepenti easily understandable , then what can not be predicted by economists kiasik is broad and kemantapanflya industrial revolution raging in all parts of the world are more developed in the late eighteenth and nineteenth centuries . Advances in technology more and able to compensate the effects of increasingly severe and profits berkunang . Maithus the crude theory about population growth in negana benlaku not state that it is more advanced . With rising income levels , then the numbers began Menuhin birth and thus act as a barrier over population growth . In the third quarter of the nineteenth century , the levels of income per capita in countries that have benkembang was far above what can be considered as the minimum threshold level of nature , and , moreover , rising by leaps and bounds . As a result the teoni kiasik regarding economic development seem not nelevan again to analyze the economic pentumbuhan countries . that have been advanced .
Most economists and leave a simple but thorough approach of writers kiasik . The changes in the number of people considered as ” certainly ” and instead should be explained again sebagam and analysis section . Similarly, the technological advances dipenkenalkan as a variable that stands sendini , has been determined by the forces of non – economic . Economists neoÄklasik be far more ” mclihat into ” than its predecessors . They begin to analyze how do lov allocate system resources in an economic group in antana usage thousands of different and competing with each other .
A. The process of capital formation .
One of the important points that a lot of benefit and how to approach noodles is capital formation . The authors looked at the classic noodle process as something that worked mechanically . The owners of capital automatically replant and most of its revenue , as long as the level of profits was in a near- zero level . Writers perfected neo – classical analysis and noodle making it more applicable to the institutional environment and abadabad nineteenth and twentieth centuries .
In the neo- classical models , the savers and investors are not necessarily the same person . Entrepreneurs can only buy capital goods with borrowed funds , and each person can save by buying valuable papers and no longer with the purchase of physical assets . Capital market became intermediaries in which savers and investors meet, and they ‘ll supply and demand of funds that can be reconciled with each other diinventasikan . Price and implementation functions of noodles is sukubunganya level . More specifically , the volume of savings is considered dependent on the interest rates . If interest rates rise , and 4 % to 6 % , it is considered that people would save more and incomes that are at a certain level . But there is also a very low interest rates at which they would prefer to spend all their income . With other words , the curve of the graph supplies funds that can be invested beijalan supply curve rose as usual . Changes in income levels also affect savings . The higher one’s income , the greater the willingness to save money on something that is certain Degree of interest rates .
In the neo – classical analysis of the Degree of interest rate also plays a very important role in determining investment . The entrepreneur will compare the percentage of profits that they earn and something of investment projects with a level percentage of what they would be able to borrow funds for financing . During the former had higher danipada the latter , then more menguntungkanlah to invest . In the state of knowledge no matter what the technology is, the greater the volume of investment , the rendahlah acquisition and additional investment activity . Like the demand curve in general , the demand for funds that can be invested thereby pointing downwards . However, improvements in technology – penyempunnaan tend to shift the entire curve to the right .
In any particular period of the intersection between the demand curve and the supply curve will determine the investment funds balk real interest rates in the market and the volume of savings and investment . The investments made in the capital stock increase economic system and thus increase productivity keijanya force . On the other hand , in the absence of technological advances that will demand curve for the invested funds will decrease , because the projects are the most profitable investments have been depleted in the previous period . Sebagal permitnaan curve and consequently the bid curve will intersect at a lower interest rates , and thus making the projects less profitable to more profitable . While this process takes place, then the volume of investment activity will gradually decrease and eventually stop after sukubunganya levels become so low that the community as a whole no longer wish to save the rest of his money . This is the position kea ~ aaan immobilising silent , but without the burden of per capita income levels are low .
Most writers neo – classical with optimism refused to accept the final results motionless sort of noodles . They agree with Marshall : ” It seems that there is not sufficient reason to think that our basis is approaching a state of silence . ” This optimism is based on two important factors . First , they believe that technological advances continue to always open the barn investment prospects are very favorable . According to their estimates , these advances will run fast enough to be able to overcome , at least in the near future to come , each urging any congestion caused by the scarcity of natural resources . Second , they assumed that any small decrease in interest rates would make the prospect of a large amount of investment to be profitable . With other words , the demand curve will be the funds that can be invested is elastic at all . Therefore, it will take a long time before a stationary position without the motion will be achieved , even in the absence of technological progress .
Optimistic view of the absence of a willingness to assume mi save at most and residents . If the desire to save the weak , the growth will be slow , no matter how lucrative opportunities to invest . But optimism neokiasik also extends as far as mi. Although they never miss any opportunity to praise the attitude to scrimp and save , most neo-classical economists assume that saving it has become ingrained habit among developed countries – a habit that becomes more and more powerful .
B. Phased Development and Dressage .
Another important aspect in view of the neo – classical growth Concerning the nature of the development is taking place bit by bit and harmonious . In contrast to the models of Ricardo and – even more so – the framework according to Marx , the development according to the neo – klasisme is not a process in which a income brackets take advantage Sedangkafl others losers . All classes benefit and growth . Advances in technology may cause temporary unemployment among certain workers , but the net effect and that such progress is increasing the demand for labor . After all , in ways that barn is just introduced gradually so that in most cases short-lived technological unemployment does not make problems .
Reflections turning profitable and growth in the industry in other industries also highlights the quality serasinya development process according to the neo – classical . Marshall introduced the notion of ” External Economics ” to describe this kind of interrelationship . With the ” External Economics ” meant the prospects increase for Something keun Tungan certain industries and as a result of an economic activity that occurs entirely outside the industry . For example , with the increasing development of an industry , then it will require more raw materials and services and environments other industries . These industries and encouraged to flourish as well . Similarly , the growth can make the price of a product , such as electric power to be down thanks to savings – savings that it is produced on a large scale . The decline in prices in turn will raise the profits among industriindustni which are users of large power . One donation brilliant minds and experts – neo- classical economics is that they managed to find an association of this kind of micro – relationships . They showed that the development is not just a series of simple relationships between some common variables .
Each step forward brings the result of a complex chain reaction which can influence on a variety of businesses and industries , and that in itself can be a cause of further growth is not small .
The notion that investment projects have good interaction to one another often used to justify plans massive investment that the government set for developing countries now mi. However , the neo-classical economists are not interesting implications of such a policy and the interrelationship – interrelationship in contrast , they are more likely to follow the wisdom of Laissez – faire advocated by writers kiasik . Government intervention is necessary to prevent monopolies and to maintain national defense , but in general atomistic competition similar companies small size is considered as the most excellent wisdom to stimulate development . They rejected the argument that some of the biggest and investment opportunities that have inter – relationships requires centralized control if the opportunities are going to be used most favorable to the fullest . According to neo- classical models , the development takes place in small steps that almost never stops . Therefore the prices in general will never stray very far as an indicator for investment opportunities most productive . Levels of economic uncertainty are also at a minimum point in the economic environment that is so smooth and harmonious . Due to that, the growers have a tendency to always observe any inter – relationships that require large investments and make cost calculations were careful to secure the success of their businesses .
III contradictions IN DEVELOPMENT
ACCORDING TO CAPITALISM – MARX .
A major challenge to the development of theory and neo – classical kiasik come and Marxist class 6 ) Marx and his followers considered traditional development theory as shallow and meaningless . Circumstances such as technological advances are going slow or scarcity of natural resources , in their view , is simply a less causes for tenjadinya fundamental difficulties in construction . We should first examine the properties that affect the economic system over the course of production to be able to find the fundamental factors that determine the pattern of development . An arrangement of certain economic activities of production determines the classification structure ( class structure) in a society . So , then , and a certain class structure so it can be formed of a superstructure in the form of ideas and institutions that dominate the culture of the society . In the early stages of a new social system , the productive forces are balanced well with the material masili class structure and the superstructure and its institutions gagasangagasan it . But the class structures and institutions that surround it turned into a permanent and can not be changed again , while the forces of production experience perubahanperubahan mateniilnya autonomously . The composition of the group that there be no benmbang again with economic forces that barn , and there was a division between the political factions willprofit and social changes and the group that will be harmed . Therefore, the production it determines everything , then the group will benefit in the end result is always going to win with the establishment of a new social system .
Here’s a glimpse of the historical – materialist interpretation of Marx . If we want to make a proper assessment of the processes and prospects for development , then we must analyze Marx growth within the framework of this theory . Social system , especially the attention of Marx is , of course , capitalism . In his view , the capitalist system containing nds of contradictions in it ssucceed . In fact , the contradictions noodles in magnitude so that the system itself will eventually collapse and be replaced by socialism . In societies without such the forces of great economic and stimulate the growth will be utilized fully , and development that will produce will benefit everyone in the community .
Growth A.Model by Capitalism .
Marx’s analysis of the development under capitalism is as follows . There are two classes in the system : the capitalist class and the working people . The first class has all the means of production ( equipment and natural resources ) contained in the economic system . The worker or the worker only has the power to sell . The goal of each capitalist is as much as possible increase profits ( rental and return on capital by Marx united only under the terms in , not only to raise their own living standards but , more importantly , also to get investment funds to be able to compete with other capitalists other .