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Production-Based Economic Theory and the Stages of Economic Development
‘In every inquiry concerning the operations of men when united together in society,
varies, their laws and policies must be different’
William Robertson (1721-1793), The History of America, 1777
1. The Idea of Stages — from Tacitus to Karl Bücher and Carlota Perez
History – it has been said – was created to prevent everything from happening simultaneously.
History implies that events happen in sequence. Stage theories are attempts, based on different
criteria, to organise history in sequential stages. In their most general form, stage theories postu-
late that a key factor in the process of socio-economic development is the mode of subsistence,
i.e. what, how, and with which tools a society produces. Stage theories are tools that can be used
to study both the qualitative changes in the division of labour over time, and the processes of in-
stitutional design and change which accompany these changes. Stage theories point towards ar-
eas where the focus of human learning is concentrated at any point in time, and as such they
serve as a basis for a qualitative understanding of processes of techno-economic change and of
Theories of periods and stages have been used in most of the social sciences. In the history
profession the material from which Man’s tools were made (e.g. stone or bronze) has become
universally accepted as the basis for establishing early historical periods: the Stone Age (Meso-
lithic, Neolithic), the Bronze Age. Other criteria could have been used, e.g. based on social or-
ganisation, but the technology variable was chosen. Not only in the history profession, but also
in anthropology the idea that technology is an important determinant for society is an old one;
example. In political science, the idea of stages of Man’s development is born – with Jean
Bodin’s (1530-1596) study of the Republic – with the commencing of the science itself. If we
define sociology as starting with Auguste Comte (1798-1857), the idea of stages was there from
the very beginning of that science as well. In economics, theories of stages were central both to
the important French economist and statesman Robert Jacques Turgot (1727-1781) and in the
teachings of Adam Smith (1723-1790). In his book on the early stage theories from 1750 to
1800, Ronald Meek goes so far as to suggest that ‘there was a certain sense...in which the great
eighteenth-century systems of ‘classical’ political economy in fact arose out of the four stage
In spite of this, today any idea of economic stages is peripheral, almost alien, to the
and discuss their usefulness from the point of view of understanding human welfare.
Incipient ideas of stage theories are found in antiquity, both in Greece and in Rome. One may
read Tacitus’ (55 ?– after 117 AD) Germania in such a way that ‘the relative degree of civilisa-
tion of the different German tribes depended upon the extent to which agriculture and pasturage,
rather than hunting, preponderated in their mode of subsistence’.
The idea of stages grew out of
tance both by the influential Arab historian Ibn-Khaldun (1332-1406) and by Machiavelli (1469-
1527). With Jean Bodin, one of the path breakers of the Renaissance, comes the idea that histori-
cal cycles may have a cumulative and upward trend: the idea of progress. With Bodin, the idea
of progressive stages is born as a child of the optimistic spirit of the Renaissance. Bodin at the
same time discusses the embryonic nation-state (the Republic), its institutions, laws and taxation.
Whereas Bodin puts much emphasis on geographical and climatic conditions, Francis Bacon
(1561-1626), in his Novum Organum gives a different explanation when discussing the startling
difference between the conditions of life in the various parts of the world. Bacon postulates that
‘this difference comes not from soil, not from climate, not from race, but from the arts.’
American conflict with England over economic theory and industrial policy.
During the Enlightenment, particularly between 1750 and 1800, stage theories were – so to
say – at centre stage, particularly in England and France. During the expansion and geographical
extension of industrial society from the 1840’s onwards, stage theories again became part of the
economists’ toolbox – this time particularly in the US and in Germany. At the time, the funda-
mental changes which could be observed made it obvious that the world was entering a histori-
cal period that was qualitatively different from all previous ones.
The stage theories born during the First Industrial Revolution – those of Turgot and of the
early Adam Smith teaching in the 1750’s – follow Man first as a hunter and gatherer, then as a
shepherd of domesticated animals, then as a farmer, finally to reach the stage of commerce. Most
Meek, Ronald, Social Science and the Ignoble Savage, Cambridge, Cambridge University Press, 1976, p. 219.
The Works of Francis Bacon, quoted in Meek, op. cit. p. 13.