Arthur Lewis (economist)

Sir William Arthur Lewis ( born January 23, 1915 in Castries, St. Lucia, † June 15, 1991 in Saint Michael, Barbados ) was a British economist and developer of the eponymous Lewis model. He tried to show how the distress in the countries of the Third World would be alleviated by appropriate economic measures through greater economic growth. Here he looked at the particular industry and agriculture in the Third World countries and their dependencies from the industrialized countries.

Life

He was from 1938 to 1948 lecturer at the London School of Economics and Political Science and then moved to 1958 Professor of Economic Policy at the University of Manchester. From 1959 to 1962 he was rector of the University College of the West Indies. He was adviser to the United Nations since 1957 and from 1970 to 1973 president of the Caribbean Development Bank. From 1963 to 1983 he was Professor of International Politics at Princeton University.

William Arthur Lewis was knighted in 1963 and received in 1979, together with Theodore William Schultz received the Nobel Prize in Economics.

Research

William Arthur Lewis described his model of the dual economy, which was later named in honor him and Lewis model, first published in 1954 in the article, Economic Development with Unlimited Supplies of Labour '. With this release, he not only laid the foundation for the development of the discipline of development economics, but you can even go so far as to say that much of the subsequent literature explanations of 1954 formulated by Lewis ideas are ( Kirkpatrick, Barrientos 2004: 679 ). The award of the Nobel Prize for Economics in 1979 is closely related to the development of his model of the dual economy ( Tignor 2004: 691 ). In the course of his duality model Lewis belongs to a manageable group who asked the question of the development of poor countries already in the 50s in the center of their scientific work ( Tignor 2004: 708).

In preparation for his model Lewis served the study of industrialized countries today, where he pays special attention to the UK. Particularly affected he was supported by the work of economic historians such as Barbara and John Hammond or TS Ashton, with the Industrial Revolution in Great Britain dealt ( Tignor 2004: 698 ). Lewis came to the conclusion that the British industrialization and the subsequent had applied the system of surplus labor in Europe ( Tignor 2004: 692 ). But Lewis did not, as many critics believe that the industrialization, as she has gone in the UK vonstatten, will be repeated in the developing countries, as these uncontrolled nature of industrialization in England in the 19th century to Slumbildung and misery of a large part of the population I had brought ( Tignor 2004: 699 ).

The basic consideration of his model lies in the rejection of the neoclassical assumption of the production factor labor is limited. Lewis takes this view to the opposite, that an unlimited number of manpower exists ( Tignor 2004: 697). This basic assumption is Lewis' search for the solution to two problems are based: first, the question of what determines the relative prices of steel and coffee, and secondly, the question why the wages during the Industrial Revolution, although profits rose, but remained constant are. The moment of recognition and thus the birth of the model of the dual economy describes Lewis in a self-written biography as follows: " One day in August, 1952, walking down the road in Bangkok, it came to me Suddenly did Both problems have the same solution. . Throw away the neoclassical assumption did the quantity of labor is fixed " (. Lewis zit in Tignor 2004: 697).

Furthermore, Lewis takes a duality of the market and differentiates between a traditional agricultural sector and a modern industrial sector. The agricultural sector serves the industrial sector as a continuous and unlimited supply of labor (Fields 2004: 724f ).

Definition of the two sectors:

• Traditional agricultural sector: low wages, low productivity, little capital, no modernization

• Modern industrial sector: high wages, capital-intensive investments, modernization

(Fields 2004: 727ff )

Basically it is about a labor transition between these two sectors of the economy. The surplus labor in the agricultural sector will change in the industrial sector and there increase productivity and thus growth, industrialization and modernization stimulate ( Ghosh 1985: 95). Since the industrial sector is growing strongly, it can absorb all surplus labor. However, it is important to note that is not adversely affected by the workers who lost to the agricultural sector, productivity, and thus the output thereof. Basis of this theory is the assumption that the agricultural sector has a limited input and indeed the country and therefore there is a number of workers who are not essentially involved in the output and its productivity is negligible and thus equal to 0. If these excess workers now switch to the industrial sector, they maintain the productivity of 1, without affecting the output of the agricultural sector. The output of the agricultural sector therefore remains the same, with production in the industrial sector is increasing ( Ghosh 1985: 95f ).

Along with this labor transition there are also rising wages. Since, as already mentioned, does not reduce the migrant workers in the agricultural sector whose productivity, get those who have remained in the traditional sector, higher wages. In the modern sector wages are to the effect in the early phase of industrialization rather low. The rising wages in the agricultural sector lead sooner or later to a stop labor transition, and if this turning point is reached, ie when the labor supply is exhausted, the economic growth leads to a general increase in wage levels (Fields 2004: 729f ).

The main players here are the entrepreneurs of the modern sector, because only when they reinvest their profits, it may come to further growth. The driving force of industrialization is therefore a capitalist class, the entrepreneurs ( Tignor 2004: 700f ).

Criticism

Theodore William Schultz, who received the Nobel Prize together with Lewis argues against the Lewis model with numerous studies of the agricultural sector, which prove that the deducted from the agricultural sector workers certainly adversely affect the output of the traditional sector. So he doubted Lewis assumption that many workers in the agricultural sector have a productivity of 0 and are thus not involved in the output. ( Ranis 2004: 717)

Lewis focuses on a closed economy in which there is only marginal to exchange between the two sectors of the economy. A major exception to this, however, the transition from labor dar. However, this point of his theory of dualism was more frequent target for critics and even he himself realized that the majority of the world's economies was not closed. For this reason, he began to increasingly turn to the later open economies, which he also found explanations for the sluggish economic change in many underdeveloped countries. ( Tignor 2004: 706f )

A major criticism of Lewis theory is seen its pure focus on economic growth and the neglect of factors such as poverty and unequal distribution, which would be the focus of today's discussion at a well. (Fields 2004: 733 ) In a modified Lewis model countries must therefore also investments in the field of social security and to minimize inequalities make in order to avoid social tensions and political instability. ( Mosley 2004: 760)

Criticism is also leveled at the neglect of the development of the agricultural sector, which goes along with the promotion of industrialization vonstatten. Also, the excessive labor migration to the modern sector is contested, especially in light of rising urban unemployment in many developing countries. ( Kirkpatrick, Barrientos 2004: 684)

Reception

According to development economists Hans -Heinrich Bass the " Theory of Economic Growth " can be viewed until the mid- 1970s as a blueprint for state involvement in the economy of almost all developing countries. The advancing state pessimism have finished the further reception. In addition, today the dualistic thinking was considered to be inadequate - both on a global scale (mainly due to the differentiation of the developing countries in Newly Industrializing and Least Developed Countries ) and in the context of developing countries themselves (such as in the Anerkunng of the " informal sector " as a separate mode of production beyond of traditional and modern sector).