Sectoral interaction and transformation of a predominantly agrarian aconomy : A discourse in the light of the classical political economy frameworks
Part of : Αρχείον οικονομικής ιστορίας ; Vol.XXVII, No.2, 2015, pages 5-18
Issue:
Pages:
5-18
Author:
Abstract:
This article is concerned with the interactions between the agricultural and non-agricultural sectors of an economy as conceived in the classical political economy frameworks in the context of the process of economic development. It is argued that while Quesnay emphasizes agriculture in producing economic surplus and, in contrast, Adam Smith stresses industry, both of them have recognized the importance of interactions or inter-linkages between these two sectors in a growing economy. Agricultural growth strengthens domestic market and thus creates demand for manufactured goods and, in turn, the industrial class will spend more on agricultural produce (the Physiocrats). On the other hand, for higher growth through higher productivity as well as efficiency, industry would employ the strategy of division of labour through extensive subdivisions in the production system (Adam Smith). And this will lead to expansion in industrial employment opportunity for the labour abundant in the agricultural sector. The paper then discusses transformation of a predominantly agrarian economy in the light of the theories of Ricardo and Marx. The Ricardian system even helps us understand today’s situation where industrial capital is entering into agriculture through contract farming and agro-processing business. The Marxian analysis saw the proletarianization of the peasantry with the rise of capitalism. According to Marx, destruction of rural domestic industry can provide the internal market which the capitalist mode of production requires.
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Subject (LC):
Keywords:
classical political economy, agriculture/non-agriculture interactions, economic development
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JEL Classification: B12, Q10, O10, O20
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