Olsen Rapid Growth 1963 (2)

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Rapid Growth as a Destabilizing Force"I

M ANYwriters-some f themreputable cholars, thers mpor-tant public officials-have implicitly assumed or explicitlyargued that economic growth leads toward political stability andperhaps even to peaceful democracy.They have argued that "eco-nomic development s one of the keys to stability and peace in theworld";'that it is "conditionsof want and instability on whichcommunismbreeds";2and that economic progress "serves as abulwark against internationalcommunism."-A recent and justlyfamous book on revolution by Hannah Arendt ascribes the mostviolent forms of revolutionaryextremismmainly to poverty.4Thisview has had an influenceon Americanoreignaidpolicyandmore often than not foreign economicaid is regardedas "an invest-ment in peace and orderlypolitical evolution towarda democraticworld."5 n one of hispresidentialmessages o Congress, or example,Eisenhowerjustifieda requestfor foreign aid funds by saying thatunless the underdevelopednations"canhope for reasonable conom-ic advance,the dangerwill be acute that their governmentswill besubverted by communism."6A committee of scholars, so distin-guished that they nearly make up a Who's Who of American

* I am thankful to the Center of Intemational Studies at Princeton Universityand to the Institute for Defense Analysis of Washington, D. C., for the supportthey have given my research,and particularly o Dr. StephanEnke of the latter organi-zation, from whose writings I have drawn several of the examples used to supportthe argument of this paper. Professors Kenneth Curran and William Hochman ofColoradoCollege, Lt. Gerald Garvey of the Air Force Academy, Mr. Richard Zeck-hauser of HarvardUniversity, and my wife, Alison G. Olson, have also offered veryhelpful criticisms. But I am alone responsible for the errors.1 Grant S. McClellan, ed., U. S. Foreign Aid (The Reference Shelf, Vol. XXIX,No. S [New York: The H. W. Wilson Company, 19571), 90, taken from a speechby Eugene R. Black, made when he was President of the World Bank.2 Ibid., p. 205, taken from a report by Richard Nixon to President Eisenhower.3 Ibid., p. 140, taken from "Final Report of Eleventh American Assembly."4 Hannah Arendt, On Revolution (New York: The Viking Press, 1963), pp. 15,54-57, 61-63, 66-69, 74-76, 80-85, 87, 105-8, 135, 181, 224, 249.r McClellan, Foreign Aid, p. 122, taken from an article by Max F. Millikan.8 Ibid., pp. 53-54, taken from a message to Congress of May 22, 1957. It is signifi-cant that all five of the quotations cited so far to illustrate the view that economicgrowth leads to political stability could be found in one anthology. The numberof writers who have accepted this argument must be very large indeed.529


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530 Mancur Olson, Jr.students of economic development,has preparedfor the guidanceof the SenateForeign RelationsCommitteea reportwhich laterwaspublishedas a book on The Emerging Nations,7and which arguesthat the United Statesshould offer most of its economic aid to thecountries in the "take-off" tage of economic development. Thecountries hat are not yet ready for this stage of rapid developmentshould get only modest amountsof aid, mainly in the form of tech-nical assistance.This favoritism n the allocation of aid is justifiedon the groundsthat a given amount of aid will bring about moregrowth if it is concentrated n the nations that are, in any case, ina stage of rapiddevelopment.This prescriptionorpolicy is justified,not on straightforward umanitarian rounds,but rather n the longterm political interest of the United States,particularly n view ofthe cold war with the Soviet Union. While at least some of thesestudents of economic developmenthave denied that they accept a"crude materialist" explanation of the causes of political stability,8the obvious premise of their policy is that the rapid economicgrowth of selected underdeveloped ountries s the "keyto an effec-tive foreignpolicy" for the United States in its cold war with theSoviet Union. Many communistshave also shared the faith thatpovertywas the preludeto revolution:the poor, they argue, "havenothing to lose but their chains."Severalscholars,however,have suggestedthat the assumedcon-nection between economicgrowth and politicalstability was muchtoo simple,or that there was no such connection.But their denialsof any positive relationshipbetween economicgrowthand politicalstabilityhave too often been mere obiter dicta. They have at leastfailed to convincemany people. It is not, therefore,enough simplyto deny that economicgrowth necessarilybrings political stability.What is needed instead is a bold and sustainedargumentin theoppositedirection.What is needed now is, not a cautiousqualifica-tion of the argumentthat economicgrowthleads towardpoliticalstability,but rathera clearand decisive argument tatingthat rapideconomic growth is a majorforce leading toward revolutionand

7 Max Millikan and Donald Blackmer, eds., The Emerging Nations (Boston:Little, Brown, & Co., 1962), pp. 142-45; and Andrew Shonfield, The Attack onWorld Poverty (New York: Random House, 1960), pp. 3-14.8 Max Millikan and W. W. Rostow, A Proposal: Key to an Effective ForeignPolicy (New York: Harper & Brothers, 1957), pp. 19-23. See the criticism of thisbook in Edward C. Banfield'sAmerican Foreign Aid Doctrines (Washington, D. C.:AmericanEnterpriseInstitute,1963), especially p. 6.


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Growth as a Destabilizing Force 531instability.Manyof the reasonswhy rapid economicgrowthshouldlead to political instabilityhave apparentlynever been discussed,at least inprint; t is thus time thatthese reasonswerestatedandputtogether n an attemptto show thatrapideconomic growthis a pro-foundly destabilizingforce.

IIAny adequate analysis of the relationshipbetween economicgrowth andrevolutionarypoliticalchanges must considerthe prob-lem in terms of the individualswho bring revolutionsabout. Stu-

dents of the sociology of revolutionoften argue that those peoplewho participate n "massmovements"of the radical left or radicalright-movements designed to bringaboutrevolutionary ather hanevolutionarychange-tend to be distinguishedby the relative ab-sence of bonds that tie them to the establishedorder.They tend tolackclose attachments o any of the socialsubgroups hat comprisea society-to extended families, for example, or to voluntary asso-ciations, professionalgroups, or social classes.Thus some of these scholarshave argued, not without evidence,that labor unions, which are often regarded as particularly ikelysourcesof strength orcommunist evolutionaries, re in fact a forcetending to reduce the chances for communistrevolutions,mainlybecausethey provideone moregroup connectionthat can hold theworker to the prevailing system. The social class, which Marxthoughtwas the engine of revolutionary hange, some sociologistsregard insteadas a stabilizing nstitution.Those who are declassee,whose class ties are weakest,aremost apt to supportrevolutionarychanges,while those who are firmly caught up in a class are leastlikely to do so. Even those who are firmlycaught up even in thelowest and least fortunate class are not normally in the revolu-tionaryvanguard, or they are secure in their modest place in thesocial hierarchy.Those who are very poor, after meeting the exi-genciesof life, have in any case very little energyleft for agitationfor a betterpolitical system,even if they had much hope that realimprovementwas possible. "Thereis thus a conservatismof thedestitute," aysEricHoffer,"asprofoundas the conservatism f theprivileged." It is not those who are accustomed to poverty, but

9 Eric Hoffer, The True Believer: Thoughts on the Nature of Mass Movements(New York: The New American Library, 1951), p. 17 and passim. See also William


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532 Mancur Olson, Jr.those whose place in the social order is changing,who resort torevolution.

IIIThe next thing is to ask how rapideconomic growthmight affectthe numberof individualswho are d'classe',or who have lost theiridentificationwith other social groups,and who are thus in circum-stancesconduciveto revolutionaryprotest.It is now generallyunderstoodthat economic growth proceedsnot so much through simple capital accumulation-throughcon-tinuingthe old methods of productionwith more capital-as it doesthroughinnovationand technicalchange. Economic growth-espe-cially rapideconomicgrowth-therefore nvolves vast changes n themethodsof production.It involvesvast changesin the importanceof different industries,in the types of labor demanded, in thegeographical onfiguration f production.It means vast changesinthe ways and places in which people live and work. Above all,

economicgrowthmeansvast changesin the distributionof income.The fact that some gain a lot and otherslose a lot, in a rapidlygrowing economy, means that the bonds of class and caste areweakened.Some rise above the circumstancesof their birth andothersfall behind. Both groupsare normallydeclassee.Their eco-nomicstatuskeepsthem from belongingwhollyto the class or casteinto which they were born, and their social situationkeeps themfrombelongingto the caste or class intowhichtheir income bracketshould put them. Rapid economic growth therefore loosens theclassand caste ties that help bind men to the social order.

But castes and social classes are not the only social groupingswhichrapideconomic growthbreaksdown. Even the family group,andespeciallythe clan orextendedfamily,can be destroyedby theoccupationaland geographicmobility associated with economicgrowth. The replacementof subsistence agricultureand cottageindustry,normallyorganizedaround the family, with factorypro-duction by workershired individually,can weaken family ties.Similarly,modernbusiness nstitutionsare bound to weakenor evento destroythe tribe,the manor, he guild,andthe ruralvillage.TheKornhauser,The Politics of Mass Society (Glencoe, Ill.: The Free Press, XM9),especially pp. 14-15; Seymour Martin Lipset, Political Man, The Social Bases ofPolitics (Garden City, N. Y.: Doubleday and Co., 1960).


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Growth as a Destabilizing Force 533uprooted souls torn or enticed out of these groups by economicgrowth are naturally usceptibleto the temptationsof revolutionaryagitation. IV

When the focus is on the fact that rapideconomicgrowthmeansrapid economic change, and that economic change entails socialdislocation,it becomes clear that both the gainersand the losersfrom economic growth can be destabilizing forces. Both will beimperfectly adjustedto the existingorder. This paper will argue,first, hateconomicgrowth ncreases he numberof nouveauxriches,whomayuse their economicpowerto changethe socialandpoliticalorder in their interest; and second, that economic growth mayparadoxicallyalso createa surprisinglyarge number of "nouveauxpauvres,"who will be much more resentful of their poverty thanthose who have knownnothingelse.

The fact that there will be some who gain disproportionatelyfromeconomicgrowthmeansthat there will be a new distributionof economicpower.But therewill be an (almostMarxian)"contra-diction"between this new distributionof economicpower and theold distributionof social prestige and political power. Certainin-dividuals are left in places in the economic orderthat are incom-patible with theirpositions n the old socialand politicalhierarchy.This means,not only that these people are in socially ambiguoussituations that may leave them "alienated"rom society; it meansalso that they have the resourceswith which they can ultimatelychange the social and political order in their own interest. Theeconomic system, the social system, and the political system areobviouslyinterdependentpartsof a single society, and if one partchanges quickly, theremust also be instability n otherparts of thesociety. The fact that the distributionof wealth will have bothsocial and politicaleffects is beyond dispute. In time, those groupswho have gainedthe fruitsof economicgrowth (or their children)will probably have built a new social and political order that issuited to the new distributionof economicpower. But, especiallyif the economicgrowth is very rapid, the path to any new equilib-riummay be highly unstable.

Something very like this seems to have happened in Europe asa result of the commercialand industrialrevolutions.The growthof commerceand industry n earlymodern Europecreated a larger


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534 Mancur Olson, Jr.and wealthier middle class; and as this middle class gained innumbers and in wealth, especially in relation to the landed aris-tocracy, it demanded, and it got, extra political power to matchthat wealth.Thesedemandswere obviouslybehindthe middle classparticipationn the French Revolution,and were also fundamentalto many of the other instances of political instability n the historyof modernEurope.Liberalismand laissez-faireeconomicdoctrinewere also related to the newly achieved gains that the industrialrevolutionbroughtto Europe,and these ideas in turn tended furtherto destabilizethe political environment.

The middle class in early modern and modernEurope was notthe only groupof gainersfrom economicgrowththat destabilizedits environment.There are other types of gainers from economicgrowth who have also attempted to change the prevailing order.Urbanareas,for example,normallygrow disproportionately uringperiods of economic growth, and those who move from farm tocity in pursuit of the more remunerativeopportunitiesthere areoften also discontentedgainers.The man who has been temptedaway from his village,his manor,his tribe, or his extended family,by the higher wages of burgeoningurbanindustry may well be adisaffected gainer from economic growth. He has been, albeitvoluntarily,uprooted and is not apt soon to acquire comparablesocial connections in the city. He is, therefore, prone to join de-stabilizingmass movements. Those who leave rural areas for thehigher wages or other gains that economic growth brings to thecities often display a nostalgia for the economically poorer, butsociallymore secure, life they left. The Chartists, or example, atone time proposed schemes that would give factory workerssmallagricultural states.10But after Britishworkershad had some timeto adjustto the urban, industrialorder,this sort of scheme lost itspopularity o programsdesignedto improve he conditionsof urbanindustrial ife. The degree of extremismof the different abor move-ments in the Scandinaviancountries has also been related to thevarying proportionsof migrantsfrom rural areas in the industrialworkforce,which in turnresulted from differentrates of economicgrowth.The firstand most gradualindustrializationook place inDenmark,and there the rate at which migrantsfrom rural areas

10 M. Beer, A History of British Socialism (London: George Allen and Unwin,Ltd., 1940), pp. 153-54.


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Growth as a Destabilizing Force 535were recruited into the urban work force was slow. In Sweden,and still more in Norway, industrialization and the absorption ofrural migrants was later and faster, and the labor movements inturn revealed, especially in Norway, more disaffection and politicalextremism." The fact that the concentration of population in citiescan sometimes make agitation cheaper and the spread of new ideasfaster is also important, as is the fact that riots and revolts areoften technically easier to organize in cities. Whenever an ideology,like Marxism,designed explicitly for the urban proletariat, is in theair, the growth of cities induced by economic expansion will beparticularly conducive to revolt.The movement from farm to city is moreover only one of thetypes of geographic mobility brought about by economic growth.Some industries and localities will expand rapidly with economicgrowth, and others, urban as well as rural, will decline. Individualsmay move from city to city or from rural area to rural area in searchof the gains from economic growth. These sorts of mobility canalso lead to a frustrating severance of social ties. The radical ele-ments in Jacksoniandemocracy, in Populism, in the unusually strongSocialist parties of some of the frontier states of the Great Plains,in the violent western mining unions, and in the Non-PartisanLeague, cannot be adequately explained by any hypothesis ofeconomic decline or stagnation. The western areas near the frontierwere growing rapidly when these destabilizing movements began,and they were often filled with people who had gained from thisexpansion. Perhaps in frontier areas, or in areas that have onlyrecently been on the frontier, the social groupings that bind peopleto the social order have not had time to develop, and as a resultthere is a susceptibility to protests against established governmentsand inherited conventions. This factor may explain Turner's alleged"quasi-revolutionary" or rebellious frontier democracy, which hassometimes been ascribed to "self-reliant pioneer" and "labor safetyvalve" theories.

VJust as the gainers can be a destabilizing force, so, of course, canthe losers. Their position in the social order is changing too, and11 See Walter Galenson, The Danish System of Labor Relations (Cambridge:Harvard University Press, 1952); and "Scandinavia" in Comparative Labor Move-ments, Galenson, ed. (New York: Prentice-Hall, 1952), especially pp. 105-20. Seealso Lipset, Political Man, pp. 68-72.


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536 Mancur Olson, Jr.they are also imperfectlyadjustedto the existingsociety.Moreover, ontrary o what is usually assumed,economic growthcan significantlyncreasethe numberof losers.It can be associatedwith a decided increasein the number whose standardof living isfalling. Thismay seem absurdat firstglance, since economic growthby definition eads to an increasein average income-to a situationsuch that the gains of the gainersare more than sufficient o com-pensate for the losses of the losers.But when average income in-creases, the number who are getting poorer may nonetheless in-crease.The gainsof a smallpercentageof large gainers may be solarge that they may exceed the combined losses of a larger per-centage of losers;median income might fall while average incomerises.In otherwords, while average ncome is increasing, he incomeof the averagemanmay be falling.It is not only a logical possibility,but also at times a practicalprobability, hat the numbergettingpoorerwill increasewith rapideconomic growth.'2This is because in periods of rapid economicgrowththere are often severalforcesthatworktowarda concentra-tion of most of the gainsin a relativelysmallnumberof hands andto a widespreaddiffusion of the losses. One of the forces that canworkin this directionis the tendencyfor wages to be more stickythan prices. Thus, as demand increases with economic growth,businessmenmay raise prices pari-passu ith the increase in de-mand, but wages may rise much more slowly. The particularimportanceof this phenomenonduring periods of inflation,whichalso seem to be correlatedsomewhat with economicgrowth, is ofcourse familiar to every economic historian, because this sameargumenthas been used to contendthat inflation eads to a redis-tribution of income from wage earners to entrepreneurs.'3

12 Simon Kuznets, while pointing out that in recent times the long-run trend inthe advanced economies is toward greater equality of incomes, has suggested thatin the early phases of economic growth (which are the main concern of this paper)there is a tendency toward increasing inequality. Kuznets' focus is on the inequalityof the overall income distribution,while this paper is concerned with the distributionof the gains and losses only; thus it would be logically possible that even when thedistributionof gains and losses from economic growth was extremely unequal, theoverall distribution of income could become less unequal, since the poorer peoplecould get the gains and the richer the losses. Nonetheless, Kuznets' conclusions aboutchanges in income distributionin the early phases of economic growth would appearto supportthe argument offeredhere. See "Economic Growthand Income Inequality,"American Economic Review, XLV (Mar. 1955), 1-28.13 R. A. Kessel and A. A. Alchian have in an interesting article denied the usualcontention that wages rise more slowly than prices and profits during inflations,but


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Growth as a DestabilizinfgForce 537Anotherforce that leads towardinequality in the distributionofthe fruits of rapid economic growth is the change of technology

involved in economic growth. When one firm, or some group offirms,beginsto usea new technique,a techniquesufficiently uperiorto the old techniquesto lead to rapidincreases n productivityandefficiency,hosefirmswith the old technologyare apt to failor at leastto suffer allingprofits.Unlessthe new technology s adoptedby allfirmsin an industryat the same time, one would expect that theintroductionor the arrivalof this technology would increase thedifferencesin profitsor lead to the failure of some of the firms.When the factorsof production-especially he labor-that the declin-ing firms employ areconsidered, he problembecomesmore impor-tantin human,and political,terms.The unskilled aborersor skilledcraftsmenreplaced by machinesare apt to be a destabilizing orce.The increasedproductivityof the modem machineryand newtechniques ntroduced n periodsof rapid economicgrowthwill nodoubtin the long run increasethe income of all classes.But thosewho suffer n the shortrunknow that in the long run they will bedead and are all too apt to be susceptibleto disruptiveagitation.The British weavers who were left unemployedin the advance ofthe industrial evolutioncertainly ost a greatdeal in a periodwhenthe nation's otal wealth andper capitaincomedoubtless ncreased.The Luddite-typemovementsagainstnew machinery hatincreasedproductivity llustratethe reactions againstthe unevennessof theshort-runbenefitsof growth.

The fact that some groups n the populationmay in the shortrunlose from rapid economicgrowthis made all the worse by the factthat societies in the early stages of industrialization arely havesuitable institutionsfor mitigating the adversitiesthat the losersin the processsuffer.While traditionalsocial institutions, ike thetribe, the extendedfamily, and the manor will often have appro-priate ways of helping those among them who suffer adversities,and while matureindustrialsocieties have developedwelfare insti-tutions,the society in an early stage of rapid industrializationwillprobablynot have adequate nstitutions o care for those who sufferfrom the economic advance. Unemployment is not normally aseriousproblemfor the preindustrial ociety. It could hardlyhaveI do not find their conclusion persuasive. See "The Meaning and Validity of theInflation Induced Lag of Wages Behind Prices," American Economic Review, L(Mar., 1960), 43-67.


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538 Mancur Olson, Jr.meaning in, say, a tribal society. The word "unemployment"sindeed a ratherrecent coinage. The unemployment, rictional orotherwise, that may result when a traditionalsociety begins toindustrializeand grow will therefore ead to seriouslosses for someparts of the society. And, since the problemis new, the society isnot apt to deal with it successfully. The United States and GreatBritaincertainly had not yet developed systemsfor dealing withthe unemployment hat was becomingincreasinglyseriousin theirsocietiesin the nineteenthcentury.

In short, rapid economic growth will bring about a situationwhere some lose part of their incomes,and others,because of thenew problemof unemployment, ose all of their incomes. Thus asense of grievance and insecurity may be a destabilizingforceresulting romthe fact that with economicgrowth,as with so manyotherthings, there are both winnersand losers.In thosecases where the numberof gainers romeconomicgrowthexceeds the number of losers, there is apt to be a number ofthose who, while they have gained in absoluteterms, have lost inrelative terms; that is, they have come to have a lower positionrelative to the rest of the income earners n that society. Some ofthose whose gains from economic growth are rather modest mayfind that they have fallen in the economic scale because of thelargeradvancesof some of the other gainers.There have been somestudies that provide interestingindirect evidence about the reac-tionsof people who areexperiencingan absolute ncrease n incomeand a relative decline in their economicposition. These studies,arisingout of the controversiesover the Keynesianconsumptionfunction, have suggestedthat families with a given level of incometend to spenda smallerpercentageof that income when the othersin that society have low incomes than they do when the others inthat society have high incomes. A family'sconsumption, n short,is affected,not onlyby that family's evel of income, but also by thelevel of incomes of the otherpeople in that society. The evidenceon thispoint ProfessorJamesS. Duesenberryhas explained n termsof the 'demonstrationeffect."The demonstrationor evidence ofhigher consumptionpatternsin one'sneighborswill increaseone'sdesirefor additionalconsumption,n the sensethatit leads to savinga smallerproportionof income.From this in turn one can perhapsinfer that, when a group'spositionin the economichierarchy alls,


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Growth as a Destabilizing Force 539there may be some dissatisfaction-dissatisfaction hat would notnecessarilybe counteractedby an absolute increase in that group'slevel of income.Therefore,quite apart rom the fact that even the relative gainersmay, as earlier parts of this paper argued, be destabilizing, andquite apartfrom the possibility that economic growth may increasethe number of losers, there is still the further fact that, when thenumber of gainers from economic growth exceeds the numberoflosers, some of the gainers may have lost ground relative to thesociety in general and may display some degree of disaffection.14

VIBut the most important error involved in the all-too-commonassumption, "when the economy grows, the standard of living im-proves," is that it neglects the very important possibility that thelevel of consumption will decline when the rate of economic growthincreases greatly. This can best be explained by using an elementary

Domar-type model. Let the marginal propensity to save be equalto the average propensity to save, and let it be symbolized by theletter S. Let the marginal capital-output ratio be symbolized by theletter R. and income by the letter Y. Then the increase in incomewith economic growth will be given by the equation dY = dS/dR.Assume a rather typical capital-output ratio of, say, 3 to 1. Theshortcomings of the capital-output ratio as a tool of prediction, orplanning, or rigorous analysis, are obvious enough, but they are notrelevant to the merely illustrative use of the concept here. Whethercapital accumulation is as fundamental a force in economic growthas some have assumed is doubtful, but there can be no questionthat captial accumulation is associated with growth. Let us there-fore accept the usual assumption that a stagnant underdeveloped

14 Is this factor offset by those who have lost in absolute terms but gained inrelative terms? It is not, because in any society in which there has been economicgrowth, from which more have gained than have lost, all those who have lost inabsolute terms will also have lost in relative terms, so there will be in this caseno class of absolute losers and relative gainers to offset the class mentioned above.The only case in which there could be a class of absolute losers and relative gainerswould be that in which the number of losers exceeded the number of gainers. Butthe Duesenberry investigations also tell us that those whose incomes are fallingabsolutely have a higher propensity to consume than those people who have thesame level of income but whose incomes have not been falling. Those who are abso-lute losers and relative gainers may therefore also feel that they are suffering from theeconomic advance.


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540 Mancur Olson, Jr.nation will normallybe savingonly about 5 per cent of its income,and growing at less than 2 per cent per year-that is, at a ratebarelysufficient o compensate or normalpopulationgrowth.Now,suppose such a nation is, through ts own efforts, going to increaseits rate of growth to 5 per cent per year. Then it must, as long asthe capital-output atio remainsconstant, ncrease ts rate of savingsuntil it saves 15 per cent of its total income: it must reduce itsstandardof living by 10 per cent, in order o tripleits rateof savings.So when growth is financedprimarilyout of domesticsources,as itnormally s, a rapid increase in the rate of growth will tend to beassociatedwith a declinein the standardof living.'5To be sure,theincreasedrate of growth will aftera time put a nation in a positionsuch that it can reduce its rate of savings again and enjoya higherstandard of living than before (provided that population growthdoesn'tthen catch up with this increasein income). It can even,if it waits long enough, get a higherstandardof living than it hadbefore withoutreducingthe rate of its savings,for in time it willhave grown so much that the smallerfraction of this largerincomewill still mean more consumption han it had before. Yet the factremains that a nation that greatly increases the rate at which itgrows through its own effortsmust normallysustain a reductionin its standardof living for a significantperiod.The all-too-commonrgument hathungerand deprivationbreeddiscontent and disaffection and that economic growth thereforereduces the chances for revoltis, apart fromits othershortcomings,ruined by the simple fact that there is in the short run no necessary,or even likely, connectionbetween economic growth and ameliora-tion of hunger and the other deprivationsof poverty. There may,instead, very well be a general decrease in living standardswithrapid economic growth.It may be only a remarkablecoincidence that Marx, writingduringa periodof rapideconomicgrowthand tremendouscapitalaccumulation n Europe, emphasizedthe "risingorganic composi-tion of capital" (the increasedimportanceof capital invested inthingsother thanlabor) as the fundamental easonwhy the advanceof capitalismwould lead to the immiserationof the workers.Butit is an interestingcoincidence:perhapsMarx's nsight was betterthanhis logic.

15 The importanceof this factor will be limited by the likelihood that most of thesaving will come from the rich.


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Growth as a Destabilizing Force 541The upshot of the foregoing arguments, hen, is that the gainersfrom economicgrowth may themselvesbe a destabilizing nfluence

because their position in the social order is changing.Those wholose from economicgrowth will also find that their position in thesocial order s changing,and they are apt to be muchmore resentfulof poverty, and aware of the possibilitiesof a better life, than thosewho have known nothingbut privation.The assumption hat eco-nomic growth amelioratessocial discontents is, in addition to itsother shortcomings,weakenedby the fact that thereis no necessaryconnectionbetween rapid economicgrowthand short-run ncreasesin the incomesof the mass of the people. And even when the in-comes of the mass of the people are increasing, t does not followthat their standardsof living are increasing, or the increased rateof saving concomitantwith economicgrowth may reduce the levelof consumption. VII

Since economic growth is associated,not only with capital ac-cumulation,but alsowith the advanceof education,skill,and tech-nology, it will be connected in underdevelopedcountries with anincreasing knowledge of the possibilitiesof a better life, of newideologies, and of new systemsof government.It will be associatedwith a "revolutionof rising expectations" hat is apt to involve,above all, rising expectationsabout what the governmentshoulddo. Economic growth, since it leads to higher incomes for somepeoplewho were previouslyat a lower standard,will itself stimulateand exacerbatethese rising expectations.Thus it is possible thatthere may be somethingin the economicsphere corresponding othe tendency for the demandsfor reformto increase as soon asreform s begun.Alexis de Tocquevillemade this point particularlyclearly.

It is not always by going from bad to worse that a society falls into revolu-tion. It happens most often that a people, which has supportedwithout com-plaint, as if they were not felt, the most oppressive laws, violently throwsthem off as soon as their weight is lightened. The social orderdestroyed by arevolutionis almost always better than that which immediately preceded it,and experienceshows that the most dangerousmoment for a bad governmentis generally that in which it sets about reform.Only great genius can save aprince who undertakes to relieve his subjects after a long oppression. Theevil, which was sufferedpatiently as inevitable, seems unendurableas soon asthe idea of escaping from it is conceived. All the abuses then removed seem


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542 Mancur Olson, Jr.to throw into greater relief those which remain, so that their feeling is morepainful. The evil, it is true, has become less, but sensibility to it has becomemore acute. Feudalism at the height of its power had not inspired Frenchmenwith so much hatred as it did on the eve of its disappearing.The slightestactsof arbitrarypower under Louis XVI seemed less easy to endure than all thedespotism of Louis XIV.16

The awarenessof racial injusticeand the willingness to do some-thing about it seem to be higher among AmericanNegroes nowthan they have been for a long time. The discontentseems to haveincreasedafter the historicSupremeCourtdecisionoutlawingsegre-gated schoolsand after a series of other steps in the direction ofracialjustice. (This discontentalsoappears o have been correlatedwith an economic improvement n the position of American Ne-groes.) Many other cases could be cited where reformnourishesrevolt; but the relevant point here is that economic growth, likepoliticalreform,can awaken a people to the possibilitiesof furtherimprovementand therebygenerateadditionaldiscontent.Thereis, however, at least one situationwhere economic growthneed not be correlatedwith increasedknowledge of new ideologies,new systemsof government,and the like, or perhapseven with thepossibilitiesof a bettermaterial ife. That is in a moderntotalitariancountry,where the mediaof communication re controlled n sucha way that they glorify the existing situation and keep out anyideas that would threatenthe existingsystem.Modern totalitarianregimes of the Stalinistand Hitlerian kinds will also have othertechniquesfor guaranteeing heir own stability, most notably thepractice of liquidating anyone who shows any lack of enthusiasmfor the prevailing regime. There was rapid growth in the SovietUnion under Stalin'sfive-yearplans; yet the nation was relativelystable,and for obvious reasons.'7Some otherdespotic regimeshavebeen less thoroughgoingn their repression han Stalinor Hitleryethave nonethelessmanaged o controldissentfairly effectively.Japan

18 Alexis de Tocqueville, L'Ancien Regime, trans. M. W. Patterson (Oxford:Basil Blackwell, 1947), p. 186.17 E. A. J. Johnson, after hearing this paper presented at the Economic HistoryAssociation meeting, objected that totalitarian nations fit the author's hypothesisbetter than other nations do, in part because the subject people naturally blame theubiquitous state for all difficult economic adjustments. He seemed to relate theopposition leading to Stalin's purges, after a period of rapid Soviet growth, and theapparent liberalization in some current communist regimes (especially Tito's), tothe rapid economic development. I feel that his criticism, if I have understood itcorrectly, is very much worth investigating.


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Growth as a Destabilizing Force 543before World War II would provide an example of this sort ofsituation.

Repressionis not, of course, the only thing besides economicgrowth that can affect the degree of political instability.Clearly,charismaticleadership, religious controversy,ideological change,and probably other things as well, also have an independent in-fluence on the degree of instability in any country. It would beabsurd to attemptto explain political instability through economicgrowth alone. Indeed, a severe depression, or a sudden decreasein the level of income, could of coursealso be destabilizing-andfor many of the same reasons that rapid economic growth itselfcan be destabilizing.A rapid economicdecline, like rapideconomicgrowth, will bring about important movements in the relativeeconomic positionsof people and will therefore set up contradic-tionsbetween the structureof economicpower and the distributionof social and political power. (Severe inflationof the GermanandChinese types will have the same effect.) There is, accordingly,nothinginconsistent n sayingthat both rapid economic growthandrapid economic decline would tend toward political instability.'8It is economicstability-the absence of rapid economicgrowthorrapid economicdecline-that should be regardedas conducive tosocial and politicaltranquility.But it would be absurd to supposethat economicstagnationwould guaranteepolitical stability.Sincethere are many factors in additionto rapid economic change thatcausepoliticalinstability, herecan be politicalinstability n a widerange of economicconditions.Thismakesit extremelydifficult o test the hypothesisthat rapideconomicgrowthis conduciveto political instability.The hypoth-esis would not be proven even if every period of rapid economicgrowthwere shownto be politicallydestabilizing, or the instabilityin these periods of rapid economic growth could be due to otherfactors that were operating at the same time. Similarly, the hy-pothesis that rapid economic growth is destabilizingwould not

18 For models in which a variety of economic conditions can lead to instability,see Ronald G. Ridker, "Discontent and Economic Growth,"Economic Developmentand CulturalChange, XI (Oct. 1962), 1-15, and James C. Davis, "Towarda Theoryof Revolution," American Sociological Review, XXVII (Feb. 1962), 5-19. Daviscontends that it is when a period of growth is interrupted by a depression thatrevolution is most likely. Davis' conclusion is not necessarily inconsistent with thispaper's,which deals with growth as a cause of instability rather than with the precisetiming of revolutions.


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544 Mancur Olson, Jr.be disproven f there were a negative relationshipbetween rapideconomic growth and political instability,for the extent of totali-tarian repressionor the presence of other stabilizing forces mightkeep the destabilizing tendencies of rapid economic growth frombeing manifest. If rapid economicchange and political instabilityare positively or negatively correlated,all this will do is establishsome tentativepresumption hat rapid economicgrowth is, or is not,destabilizing.A finaljudgment, f one could ever be made, wouldhave to rest on detailedhistoricalstudies of a vast variety of cases.These historicalstudies wouldhave to be so carefuland so detailedthat they looked, not only at the connection over time betweeneconomic and political change, but also at the complex of detailedeconomic,social,andpolitical changes.They would have to identifyboth the gainersand the losers fromrapideconomicgrowthand allof the other factorsaffectingpoliticalstability,and then attempttocome to a judgmentabout the role of the economic changes. Amassive set of historical studies of the kind needed, covering allhistorical periods and countries in which there has been rapideconomic growth or political instability, is obviously out of thequestionin a brief paper, even if it were within my competence,whichit is not. But it is nonetheless mportant hat historians houldstart studying at least parts of the problem,however difficult, assoon as possible. VIII

There are several important historical situations in which therelationship between economic growth and political instabilityseems particularlyworth studvini.19Consider, for example, the

19 In pointing to cases of instability, however, it will be necessary to distinguishgenuine instability of an entire society from some of the superficial changes thatare occasionallymistaken for true instability. In the Third Republic in France therewere frequent changes of cabinets and many complaints about "instability."Butthe policies of the French governmentwere quite stable, and the different cabinetswere composed of roughly the same men, and roughly the same coalitions of parties,so basically nothing in the life of France changed. The French could rightly saythat there had been only a reshufflingof the political deck-that the more thingschanged the more they remained the same. Similarly the "palace guard" or "coupd'etat" type of change of government so common in Latin America should not beconfused with a genuine social revolution.The changes of governmentbrought aboutby the "palace guard" or by the army obviously depend mainly on what goes oninside the "palace guard" or inside the army rather than upon what goes on insidethe economy. And these changes of government often bring no changes in policy,in any event. Thus it is important to distinguish the political intrigue of the Thirdand Fourth Republics from true political upheavals like the French Revolution, andthe routine Latin American coup d'etat from the Peronist or Castroist revolution.


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Growth as a Destabilizing Force 545Reformation, the English civil wars, the French Revolution, themiddle class upheavals of nineteenth-century Europe, the rise ofcontinental Marxism, and the Russian Revolution.It is clear, first, that the Reformation followed a period of eco-nomic growth. Partisans of medieval and early modern institutionsmay debate the exact timing of the speedup in the Europeaneconomy, but there can be little doubt that the pace of economicchange quickened well before the Protestant Reformation becamea major mass movement. This Reformation, moreover, continuedthrough the Age of Exploration and the Commercial Revolution.Nor can there be any doubt that the Reformation was a profoundlydestabilizing movement-one which destroyed much of what wasleft of the medieval order and which threatened the existence ofthe dominant institution of that order. While Henry VIII's renuncia-tion of the Pope and the conversions of some of the German Princeswere of course important, the Reformation was nonetheless in largepart a genuine popular uprising. It featured spontaneous peasantrevolts and thousands upon thousands of voluntary conversions,many in spite of governmental opposition or repression. The ThirtyYears War certainly involved the mass of the people as well as therulers, and it affected every facet of German life. There wasobviously a fertile soil in Early Modern Europe for dissident anddestabilizing popular movements, and the fertility of this soil couldhardly be attributed to economic stagnation.The continuing religious controversy that finally culminated inthe English civil wars also had deep roots in the popular con-sciousness. But before and during these popular religious contro-versies there had been a great deal of rapid growth.20Thus eco-nomic stagnation could hardly explain the deep divisions in Englishlife that ultimately led to the civil wars.British life after the civil wars, was, for a considerable time, lessdisruptive than it had been. It was only with the onset of theIndustrial Revolution that the pace of popular dissent again beganto quicken. The last half of the eighteenth century and the first halfof the nineteenth century in Great Britain saw the near revolutionof the 1780's, the Luddite movement, the Chartist agitation, the

20 See for example J. U. Nef, "The Progress of Technology and the Growth ofLarge Scale Industry in Great Britain, 1540-1640," and "Prices and IndustrialCapi-talism in France and England, 1540-1640," in Essays in Economic History, ed. E. M.Carus-Wilson (London: Edward Arnold Ltd., 1954), I, 88-134.


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546 Mancur Olson, Jr.Great Reform bill, and a considerable assortment of riots and minoruprisings. Yet this was of course a period of rapid growth. By thesecond half of the nineteenth century, the basis of a modem indus-trial order had been built, and the rate of economic growth soonbegan to slow down.21 Economic growth was no longer working todestroy traditional life, and this in turn led to a calmer politicalclimate.

It has been argued, at least since De Tocqueville's book on theAncient Regime, that the French Revolution also followed upon aperiod of economic growth. De Tocqueville also argues that therevolutionary fervor was strongest in those parts of France thatwere advancing most rapidly and weakest in those places that wereadvancing least.22 The leading participants in the French Revolu-tion (as in other revolutions) were, moreover, not generally drawnfrom the poorest classes-as Crane Brinton has told us. The risingmiddle class, swelled by those who had gained from the economicgrowth, was perhaps the dominant force, though the aristocraticand lower classes at times also played important roles.

Farther east in Europe, the economic advances were much laterin coming. It was the last half of the nineteenth century beforePrussian economic growth reached a rapid rate. And during thisperiod of the Prussian or German take off, the political life ofGermany was seething with discontent. Germany had the largestMarxist party anywhere, in spite of the fact that both the stick ofrepression and the carrot of social insurance were used in attemptsto destroy German Marxism.In Russia, the take off was still later.23It was only in the lastquarter of the nineteenth century and the first years of the twen-tieth that Russian industrialization gathered speed. The Russianlabor force was growing rapidly in the years before World War I,and the incidence of strikes and riots was correlated with the speed

21 See J. L. Hammond, "The Industrial Revolution and Discontent," EconomicHistory Review, II (Jan. 1930), 215-28, and G. D. H. Cole, A Short History of theBritishWorkingClass Movement, 1787-1947 (London: George Allen & Unwin, Ltd.,1948), pp. 121-51.22 De Tocqueville, L'Ancien Regime, pp. 185-86. Just as there are many scholarswho subscribe to De Tocqueville's argument, there are also many who dispute it.23 W. W. Rostow, The Stages of Economic Growth (Cambridge [Engi.]: TheUniversityPress, 1960), pp. 38, 66-67, 93-105, and Alexander Gerschenkron,EconomicBackwardness n Historica Perspective (Cambridge: HarvardUniversityPress, 1962),pp. 5-30.


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Growth as a Destabilizing Force 547at which the economyadvanced.24 he revolutionary ermentwhichcharacterizedRussia in this period and which reached its climaxin the revolutionsof 1917 may, therefore,have been related to thetake off of the Russianeconomy.

In the currentlyunderdevelopedcountries, too, there is someevidence linking rapid economic growth and political instability.Of all the underdevelopedcountries,few had progressedas far oras quickly as Cuba in the years before Castro. In other countriesof Latin Americaas well there seems to be a positive associationbetween increasing incomes and political discontent. It was inArgentina, which had nearly completed an industrialrevolution,that Peron stagedhis Fascist-Socialist evolution.Venezuela,whichhas grownto the point where it is one of the wealthiestof under-developed countries, s consideredone of the most likely candidatesfor a Communist akeover.Brazil s said to be in the midst of a takeoff, but its political life is scarcely stable. By contrast,Paraguay,Peru,andEcuadorare amongthe slowestto develop,and they seemfurthest removed also from any genuine social revolution.In theMiddle East, the states that have advanced urthest, ike Egypt, areless stable than the most stagnant, ike Saudi Arabia.Many of themost progressiveparts of India are said to have displayed the mostdiscontent, while some of the more stagnantareas have been rela-tively quiet.25The nation as a whole made significanteconomicprogressbetween 1952 and 1957, yet the Communistvote increasedfrom 4 million to 12 million in this period. In underdevelopedEastern Europe before World War II, Czechoslovakiahad themost progressiveeconomy and the largest Communistparty.26 npoor but rapidly growing Italy there is one of the largest Com-munist parties outside the Iron Curtain.27

24 Lipset, Political Man (cited in n.9) pp. 70-71.25 Bert F. Hoselitz and Myron Weiner, "Economic Development and PoliticalStability in India," Dissent, VIII (Spring 1961), 172-79. For a general, theoreticaltreatmentof the relationshipbetween economic and political change, with particular

applicationto India, see CharlesWolf, Foreign Aid: Theory and Practice in SouthernAsia (Princeton: Princeton University Press, 1960). I am indebted to Mr. Wolf forhelpful suggestions on this topic.26 I am indebted for many of these examples to Stephan Enke, Economics forDevelopment (Englewood Cliffs, N. J.: Prentice-Hall,Inc., 1963), and to F. Benham,Economic Aid to Underdeveloped Countries (Oxford: Oxford University Press,1961).27 On Italy, see Robert Neville, "Catholic-Yet Communist-Why?" New YorkTimes Magazine (June 2, 1963), p. 61.


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548 Mancur Olson, Jr.Ix

Thus, both European history and contemporary experience pro-vide concrete situations against which the hypothesis that rapideconomic growth leads to political stability can usefully be com-pared. Moreover, even the most casual glance at these situationsestablishes some presumption that this hypothesis would be sup-ported by further study. If this paper is correct in suggesting thatthere are reasons why political instability should be associated witheconomic growth and that (at least until there is further research)the presumption should be that this hypothesis is generally con-sistent with the empirical or historical evidence, then some currentprescriptions for American policy need rethinking.There are those students of economic development, mentionedearlier, who argue that the United States should give most of itsforeign aid to nations in the take-off stage of economic development,at the expense of those nations that have yet to establish the "pre-conditions" for the take off. This policy is justified, at least partly,in terms of the American political interests during the cold war.But if it is true, as this paper argues, that rapid economic growthof the kind that might be expected in the take-off stage is politicallydestabilizing, such a policy would work to the advantage, not of theUnited States, but of the Soviet Union. Such a policy would placethose governments that the United States thinks are worth aidingin additional jeopardy by stimulating destabilizing forces. In viewof the current world political situation, there is a very large chancethat the destabilizing forces will be Communist and linked withthe Soviet Union or Communist China. Thus, a policy designed tomake those nations already in the fastest stage of growth grow yetfaster through economic aid does not seem to be consistent withthe announced purposes of American foreign policy.It would be more nearly consistent with American policy to givethe nations in the earliest stages the larger amount of aid. While itmay be true that nations in this stage cannot now grow rapidlyeven with large infusions of aid, they can be enabled to movethrough the preconditions stage much faster than they would other-wise do. The aid given to them, while it might not result in a rapidgrowth rate now, could still move much nearer to the present thedate when these nations become developed industrial states. If theefficacy of aid is measured, not in terms of current growth rates,


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Growth as a Destabilizing Force 549but rather in terms of how much it moves ahead the date whenthese nations become modernized, t might well be more efficientto give aid to the nations that have not yet reached the take-offstage.Moreover, aiding such nations could encourage a somewhatsteadier type of progressthat would be more conducive to con-structive political evolution. The most serious political problemsseem to occur in those countriesthat industrializewith a violentadvancebecause theirindustrialization as been greatly postponed.CompareBritainand the Soviet Union.Britainwas the firstnationto experience an industrialrevolution,and as a result its economywas modernized and changed relatively slowly and steadily. Im-portant and revolutionaryas the improvements n Britishindustrywere during the IndustrialRevolution, they nonethelessinvolveda less dramaticbreakwith the economic practicesof the past thanRussiaexperienced.Britain'sIndustrialRevolutionfollowed in thepath broken long before by its commercial revolution. Whenmoderntechniqueswere brought to Russia and led to its take offin the late nineteenthandearlytwentieth centuries, here was a farmore violent change. In Russia, there was very nearly an abruptchangefrom a fourteenth-centuryeudalism to a twentieth-centuryindustrialism.Moderntechnology was superimposedupon a back-ward society, and the process of adjustmentwas therefore par-ticularly painful.28The contrast between the types of economicdevelopment n Britainand in Russiamay have had something todo with the democraticevolutionof GreatBritainandthe BolshevikRevolution n the SovietUnion.The underdevelopedcountriestoday may face even moreabruptandpainfultransitionsntomoderneconomic ife than Russia aced.The take off in these countriesmay therefore be even more trau-matic than Russia's.It can only make the transitionmore painfulfor these countries,however,if the United Statescurtailsaid to themostbackwardof these nations,thuspostponing heir (presumablyinevitable) industrialization.f, when these nationsreach the take-

28 ". . .great delays in industrialization tend to allow time for social tensions todevelop and to assume sinisterproportions . . . The Soviet government can properlybe described as a product of the country'seconomic backwardness . . . If anythingis a 'grounded historical assumption,' this would seem to be one: the delayed in-dustrial revolution was responsiblefor a political revolution in the course of whichpower fell into the hands of a dictatorialgovernment...." Gerschenkron,EconomicBackwardness, p. 28.


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550 Mancur Olson, Jr.off stage, the United States then gives them vast amountsof aidand makesthe transition o a moderneconomy even more abruptand disruptive hanit wouldotherwisebe, this will surely stimulatepoliticaland social instability.If, on the other hand, the United States gives a great deal ofemphasisto preparing the poorest countriesto survive the stormand stressof delayedindustrialization nd attempts to build a basisfor steady and sustainedgrowth,it may help spare these countriessome of the politicalturmoil hat industrialization o often involves.By strengthening he educational nstitutions, he civil services,themilitaryorganizations, he labor unions, and the business institu-tions of emerging nations, the United States can in some degreepromote their economic growth,while at the same time increasingtheir capacity to endure the growing pains that industrializationwill involve.By startingnow to promotethe modernization f back-wardcountries, he United Stateswould at least reducethe extentto which the industrializationof the underdevelopednations isretardedand thus make the industrializationprocess a little lessrevolutionary han it would otherwise be.The primarypurposeof the foregoing argument s to show theinadequacyof the conventionalcontention hat economicaid shouldbe given mainly to nations in the take-off stage. Hopefully, thispurposehas been servedby showingthat the oppositepolicy is, ifanything,moreplausibleand morenearlyconsistentwith Americanobjectives.It wouldbe going too far, however,to suggestthat it isenough simply to concentrate aid in the nations that are not yetin the take-offstage. Those who (like myself) advocate economicaid must appreciatethe incrediblecomplexityof the problemandbe more wary of generalpolicy prescriptions han some previouswritershave been. The genuinelyphilanthropicandpurelypoliticaljustificationsor certain aid grantsneed to be studied moresympa-thetically. It is not enough simply to concentrateeconomic aid inthe take-offstage or even to justify economicaid solely in terms ofthe economicgrowthit is supposedto bring about.X

If there is indeed a connectionbetween rapid economic growthand political instability,then those Westernscholarswho criticizethe underdevelopedcountriesfor attemptingto provide some ofthe servicesof the modernwelfarestate may be a bit off the mark.


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Growthas a DestabilizingForce 551It is no doubt truethat the underdevelopedcountriescannot affordmodernwelfaremeasuresas well asthe advancednationscan. But itis perhaps also true that they need these modern welfare institu-tions more than the advancedcountries do. These welfare meas-ures, though they might retard growth, could nonetheless be aprofitable nvestment in social peace. They could ease the plightand alleviate the discontents of those who lose from economicgrowth.Those who assume that, because certain welfare measures inunderdevelopedcountriesmight decrease the rate of growth, theyare therefore undesirable,make the mistake that Karl Polanyidiscussed n The GreatTransformation.olanyi was, in my opinion,quite correct in emphasizing hat the relativemeritsof alternativeeconomic policies had not been decided when it was shown thatone led to a faster rate of growth than the others. The differingimpactsof capitalisticand socialisticeconomicsystems on the po-litical andsocial life of a society alsohad to be considered.Polanyifelt that, while laissez-fairecapitalism ed to a high rate of growth,it imposed too great a burden of adjustmenton society. His argu-ment is indeed interesting;but to me he is quite wrong in identify-ing the socialdisorganization esultingfromeconomic changewithcapitalism lone.Whatever he organization ndcontrolof the meansof production,rapid economicgrowthmust require painfuladjust-ments. In few places has economicgrowth nvolved suchpainfulad-justmentsas in the Soviet Union n Stalin's irst ive-yearplan. Andintheunderdeveloped ountries oday,nationalizedndustriesareoftenplayinga majorrole in the struggle for economicgrowth. It wouldbe hard to see how the nationalizationof industry itself wouldreduce the disruptionthat economic growth causes. The personwho leaves the tribe,the manor, he peasantvillage,orthe extendedfamilyfor the modernfactoryin the growingcity will find that heis in an alien environment,no matterwho runs the factory. If thefactory is to be run in the interest of maximumproduction,undersocialistor privatemanagement, t cannot fail to impose a new andburdensomediscipline and a new style of life upon the recentlyrecruitedworkforce.Thus the point is that rapid economic growth, whatever thenature of the economicsystem,mustinvolve fast and deep changesin the ways that thingsaredone, in the placesthat things are done,and in the distributionof power and prestige. Most people spend


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552 Mancur Olson, Jr.such a large proportionof their time working or a living and drawsuch a largepart of their social status and political influencefromtheir economicposition that changes in the economic ordermusthave great effects on other facets of life. This is especiallytrue inunderdevelopedsocieties, where the institutionsthat exist weredeveloped in relatively static conditions and are not suited tomaking rapid adjustments.29 herefore,until further research isdone, the presumptionmust be that rapid economic growth, farfrombeing the sourceof domestic tranquility t is sometimessup-posed to be, is rathera disruptiveanddestabilizing orce that leadsto political instability.This does not mean that rapid economicgrowthis undesirableor that political instabilityis undesirable.Itmeans,rather, hat no one should promotethe first without bracingto meet the second.

MANCUTROLSON, JR., PrincetonUniversity29 The relatively brittle character of most institutions in traditional, underdevel-oped societies is illustrated by Max Weber's analysis of the origins of castes and

classes. He argued that a caste system would thrive only in a relatively static society,for it makes virtuallyno provisionfor the changes in individual rankingsthat chang-ing societies require. A modem class system, by contrast, allows for some changesin the positions of individuals. See Max Weber, From Max Weber: Essays inSociology, H. H. Gerth and C. Wright Mills, ed. and trans. (New York: OxfordUniversity Press, 1946), especially pp. 193-94.) Presumably most institutions oftraditionalsocieties have not had to develop a great deal of flexibility, while thosethat have evolved in dynamic industrial societies have acquired some capacity toadjust to rapid change. Accordingly, the thesis of this article would explain thesocial and political effects of rapid growth much better in underdeveloped societiesthan in economically advanced societies. The thesis here would fit countries likethe United States, Canada, Australia, and New Zealand least of all, for these coun-tries of relatively recent settlement have inherited fewer feudal institutions thanother nations, and their institutions have had to evolve in rather rapidly changingconditions from the beginning.

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Olsen Rapid Growth 1963 (2)