Despite 50 years of development experience, fundamental questions about development remain unanswered. The world still lacks a comprehensive theoretical framework that adequately explains such phenomenon as the very high rates of development exhibited by East Asian countries for many years, the failure of Malthusian projections, the growing contribution of non-material resources not subject to depletion, the apparent failure of market policies in the transition of Eastern Europe, and conflicting predictions about the future of work based on the contrary recent experiences of North America and Western Europe. A profusion of economic theories provide explanations for specific expressions of development, but none links all the pieces into a unified theory that adequately defines the central principles, process and stages of development. The formulation of a comprehensive theory of development would make conscious the world’s experience over the past 500 years, reveal enormous untapped potentials and vastly accelerate future progress.

This paper identifies the central principle of development and traces its expression in different fields and levels of social advancement. Development is a function of society’s capacity to organize human energies and productive resources to respond to opportunities and challenges. The paper traces the emergence of higher, more complex, more productive levels of social organization through the stages of nomadic hunting, rural agrarian, urban, commercial, industrial and post-industrial societies. It examines the process by which new activities are introduced by pioneers, imitated, resisted, accepted, organized, institutionalized and assimilated into the culture. Organizational development takes place on a foundation of four levels of infrastructure – physical, social, mental and psychological. Four types of resources contribute to development, of which only the most material are inherently limited in nature. The productivity of resources increases enormously as the level of organization and input of knowledge rises. The theory identifies the human resource as the driving force and primary determinant of development.

The evolution of social institutions act as powerful stimuli for development by increasing the frequency, intensity and efficiency of social interactions. This evolution has moved through three successive but overlapping stages of development – physical, vital, and mental – that can be described in terms of the type of organization predominant during that stage. The paper examines the role of three organizations characteristic of the three stages – urbanization, money and the Internet.

Early cities were physical organizations where people, activities, fields of life, resources and infrastructure accumulated at high levels of concentration and interacted in complex ways. The growth of population and urban population density increased the intensity of these interactions, creating the critical mass needed for the emergence of markets and generating sufficient demand to spur mechanization of production during the Industrial Revolution.

Money has played a parallel role at the social level as a medium for urbanization, multiplying economic activities by several orders of magnitude. Establishment of a money economy freed individuals from dependence on land as an essential resource for production and freed commerce from the double coincidence needed for barter trade. Money increased the frequency and speed of transactions in virtually every field of activity by making it possible for people to convert the fruits of their labor into a common currency that could be exchanged for any products or services. Money provides incentives for people to produce more than they can consume, releasing greater energy and creativity. It serves as a medium for conservation and storage of what each person produces and permits easy transfer over any distance, thereby overcoming limitations imposed by time and space and dramatically increasing the efficiency of transactions.

Internet promises to play a similar role at the mental level of information and knowledge as a medium to organize globalization. Internet is increasing the frequency, speed and efficiency of information exchange in every field – commercial, industrial, educational, scientific, political, religious, recreational, etc. Internet also overcomes the limits of time and space by enabling instantaneous access to information around the world. It increases enormously the number, intricacy and complexity of interactions made possible between individuals, organizations, facts, activities and fields of knowledge. Internet is an organized medium for bringing all existing social organizations into greater contact to release the maximum energy of society leading to unprecedented levels of social productivity and development.

From the perspective of 10,000 years of history, human progress over the past 200 years has been extraordinary and the achievements of the past five decades are nothing short of miraculous. In two centuries social productivity has increased to the extent that the global community is now able to sustain a population 12 times as large as in 1800. From a rural-based, agrarian society in which less than three percent of the people lived in towns and cities, the human community has evolved into an urban-centered, industrial society in which the urban population now exceeds 40 percent of the total. This change has brought with it and aggravated a host of problems – overcrowding, pollution, crime, etc.—but it has also brought political freedom, economic security, education and modern conveniences to billions of people.

What is more remarkable is that this social movement continues to expand and accelerate. The 1997 UNDP Human Development Report observes that over the past 50 years the world has made greater progress in eradicating poverty than during the previous 500. Around the globe, life expectancy is climbing, infant mortality is declining, epidemic diseases are receding, famine is becoming extinct and education is becoming more widespread. Since 1950 average per capita income has tripled, in spite of unprecedented population growth, and average real per capita consumption in developing countries has doubled. These achievements raise the possibility and the hope that unprecedented levels of prosperity could soon spread to all humanity.

These accomplishments still leave more than one billion people in poverty. But there is growing evidence to suggest that today’s least developed countries could match and perhaps even exceed the achievements of the most advanced industrial nations within a much shorter time than it took for the original achievements. Beginning in 1780, it took the United Kingdom 58 years to double output per capita. The United States did it in 47 years, beginning in 1839. Japan accomplished the feat in only 24 years, beginning in the 1880s. But after the Second World War, Indonesia did it in 17 years, South Korea in 11, and China in 10. From 1960 to 1990 real per capita standards of living based on purchasing power parity multiplied twelve-fold in South Korea, seven-fold in Japan, more than six-fold in Egypt and Portugal, and well above five-fold in Indonesia and Thailand.

While the possibilities for increasing the velocity and expanding the scope of development to all countries are encouraging, it is by no means clear how quickly or to what extent they will be realized. Nor is there consensus regarding the policies, strategies and actions most conducive for that realization. Regardless of whether we consider developing countries, nations in the process of transition to market economies, or those moving from the industrial into the post-industrial phase, countries and regions are distinguished by vast differences in performance that are not easily explained or eliminated.

Among developing countries, between 1965 and 1990 per capita GDP rose by 5.5 percent annually in high performing East Asian countries compared to less than 2 percent in South Asia and about .25 percent in Sub-Saharan Africa. Much thought has gone into analysis of the Asian Tigers’ success, but no generally accepted formula has emerged from their experience that is applicable to countries at different stages of development and faced with differing conditions than those prevalent in East Asia during the past few decades.

The experience in Eastern Europe since 1990 suggests that our understanding of the development process is far from complete. The transition strategies implemented by 25 East European countries were unable to prevent widespread economic decline and social distress. Production in all 25 countries fell significantly, from a minimum of 18 percent in Poland to 45 percent in Russia, 60 percent in Ukraine and 75 percent in Armenia. Even in East Germany, where the German government and industry have pumped in more than $1.1 trillion since reunification, the expected results have not been achieved. Unemployment in East Germany has grown from very low levels to more than 25 percent, while productivity remains at one-fifth the level prevalent in the western part of the country.

Questions regarding strategy and wide disparities in performance are also found among advanced industrial nations, particularly with reference to the issue of employment. In 1990 the people of the Western world shared a powerful common anxiety about the future of work. Since then unemployment has been increasing throughout most of Europe to reach the highest levels in half a century. At the same time, it has been falling in the USA, where the employment rate has reached peak historical levels and is projected to continue rising through the coming decade. Technological development, which people everywhere feared would devour more and more jobs in the coming years, appears to be associated with opposite effects on different sides of the Atlantic.

The experience of the past two centuries has given rise to at least five major categories of development theory. Applying these theories to explain the development of 23 countries during the period 1850-1914, Morris and Adelman found that each major theory adequately explains the experience of a range of countries and periods, but none of the theories applies universally to the 19^th Century experience of all the countries. These findings suggest the need for a more comprehensive approach. Realization of this need prompted then Secretary General of the United Nations, Boutros Boutros-Ghali, to call for thoughtful reflection on development "as the most important intellectual challenge of the coming years."

Why focus on theory when there are so many pressing practical problems that warrant attention? Because awareness of a theoretical possibility can help us discover real opportunities and potentials that might otherwise go unrecognized and untapped. The recent acceleration of social development is an observable and measurable fact. But in the absence of a theoretical framework, it is difficult to discern, for instance, whether the astonishing accomplishments of East Asian countries over the past two decades are a temporary aberration in an otherwise very gradual process or the forerunner of even higher growth rates in future.

The power of comprehensive theoretical knowledge is dramatically illustrated by the efficacy of modern medical physiology. The human body is a highly complex organism in which multiple systems and subsystems work together as a seamless unity to maintain health and support growth and development. Each physiological function can be reduced to basic principles of physics and biochemistry that are common not only to all human systems, but all life systems as well. Hundreds of major or minor factors enter into the equations that support health. An excess or shortage of even a single factor can disturb the balance, retard growth or threaten life. Treatment may concentrate on one errant factor, but it is based on knowledge of the greater whole in which this factor operates. Medical knowledge has become so precise that analysis of the chemical composition of the blood can be used to ascertain overall health and accurately diagnose a wide variety of disorders in people of different ages and physical condition.

Society is also a complex organism in which multiple systems and subsystems work together to maintain the health of the community and support growth and development. But here the similarity ends. For when it comes to development, there is no agreement on the fundamental principles that govern social functions. Many partial theories have been put forth that help us explain specific phenomena and formulate successful strategies based on a few key factors in conditions which are stable and fall within the familiar boundaries of economic growth. But when we try to extend the theory to new and rapidly changing circumstances, such as those prevalent in Eastern Europe during the recent transition period, we find that explanations and strategies based on one or a small group of factors are insufficient to account for the variety of different results or to formulate policies appropriate for each particular circumstance. Development is a complex, multidimensional phenomenon that touches every major strand of social activity, applies to a very wide range of circumstances and passes through many different stages in its progression. An adequate theory must be sufficiently comprehensive to address this breadth of activity, circumstances and stages. Ultimately it should lead to the development of diagnostic capabilities that approach the precision achieved by medical science.

Experience from other fields demonstrates that a conscious knowledge can increase the speed and efficiency of any activity by a factor of 10 or even more. A trained mechanic or engineer easily repairs a defective machine, while an untrained user may flounder for long periods and very possibly make the problem worse. A clearer theoretical understanding of development will not only reveal opportunities that presently are unrecognized. It can also lead to the formulation of more effective strategies capable of increasing the speed and efficiency of development by a factor of ten or more.

Humanity has progressed very far from its modest origins. It has already created what must appear from a historical perspective almost infinite plentitude. Development theory should enable us to understand what productive power or powers have made this great accomplishment possible and what further achievements still lay in potential that can be attained through further exercise of this same or other powers. We observe today a confluence of conditions that seem to indicate that a further acceleration of social progress is possible. They include a broad range of political, economic, technological and social factors that have direct or indirect impact on development. Each in itself can support higher rates of social advancement. Taken together, their contribution could lead to accomplishments at least as far beyond present levels as society has already advanced since the beginning of the Industrial Revolution. Development theory should not only confirm or deny this possibility, but also show the precise relationship between these conditions and the greater results society seeks to obtain.

1. Peace: Any evaluation of development potentials needs to take into account the influence of internal and external social stability on social progress. The end of the Cold War has dramatically reduced the threat of armed international conflicts and the catastrophic consequences of nuclear war, providing a far more stable and secure climate for worldwide economic expansion. War is a destroyer of development. It physically demolishes what society has accomplished. The Cold War limited the physical destruction to regional conflicts, but it directed a substantial portion of the energies and talents of the world community into an unproductive arms race. Since 1988, world military expenditure has fallen by about a third, $400 billion. If the current peaceful status is sustained, it could free up even more capital for investment and reducing the inflationary pressure of burgeoning government deficits. The long feared negative impact of reduced military expenditure on economic growth has been much less than anticipated. Falling defense spending has been followed by a surprisingly rapid recovery in defense-dependent states such as California and an unexpectedly long period of national economic expansion in the USA. This experience should help reduce the resistance to further cuts.
2. Democracy: Since 1980, a democratic revolution has been spreading through Latin America, Eastern Europe and, most recently, Africa, freeing hundreds of millions of people from repression by authoritarian regimes. As peace provides a secure external environment for international development, democracy provides a stable and conducive environment within countries for more rapid social progress. Democracy raises human aspirations. It encourages individuals to take active initiative for their own advancement. It facilitates freer and wider social interactions. It releases greater social energy. It vastly increases the dissemination of information and the multiplication of new organizations. As the transition from monarchy to democracy was a catalyst for rapid economic advancement of Western countries over the past three centuries, the spread of democratic institutions today opens up greater possibilities for global expansion. Development theory needs to explain the dynamics of the process by which political and social conditions impact economic performance.
3. Social Velocity: Development is a function of the velocity of social transactions. The speed of movement of information, ideas, decisions, technology, people, goods and money has significant impact on the productivity of the society and its further advancement. The ‘shrinking of the world’ through better transportation and communication opens up commercial opportunities inconceivable just a few years ago. During the past two decades the volume of international travelers, freight, telephone and other forms of electronic communication have increased by more than an order of magnitude. Between 1980 and 1994, overseas telephone traffic to and from the USA increased from 200 million to 3.4 billion calls. New technologies such as satellite-based wireless phones are reducing the cost of expanding the communications infrastructure. Electronic mail has drastically reduced the cost and increased the speed of written communications. The meteoric growth of the Internet provides instantaneous low cost access to global sources of information and commercial markets. The speed of technology diffusion is also accelerating. The Xerox machine was not introduced into India until the late 1970s, more than 15 years after its use became widespread in the USA. Three years ago, Windows 95 was launched in New Delhi just weeks after its release in the USA. Last year Intel announced its latest microprocessor simultaneously in USA, India and Beijing. A comprehensive theory needs to account for the contribution of the increasing velocity of social transactions on development in the past and its potential for accelerating social progress in the future.
4. Technological Application: The rate of technological innovation and diffusion is one thing, the extent of technology application is quite another. Technological development far outpaces technological applications and accomplishments in even the most advanced societies. Adoption and full utilization of already proven technologies can dramatically elevate performance in every country and in every field. To cite a single example, the average yield of tomatoes in India is 8 tons per acre, yet more advanced farmers achieve yields as high as 20 tons. The average yield of tomato in California is 35 tons in California, but one of California’s leading tomato farmers with 1200 acres under cultivation routinely obtains average yields of 55 tons or more by applying advanced systems for micro-nutrient management applicable to all crops and climates. Applying more sophisticated and capital intensive technology, Israeli farmers achieve yields of 250 tons or more of tomato per acre. This wide variation in the application of technology within and between countries is nothing new. But it is a significant determinant of development and a factor that is at least partially responsive to social policies. The theory needs to explain these variations and show how they act as determinants of the development process.
5. Global Growth Engines: The global economy is developing multiple centers and engines of growth. The impact of these factors is compounded by the globalization of economic growth. In the past, the growth of the world economy has been driven by a single country or at best by a few localized centers, while the vast majority of nations benefited only peripherally or not at all. The emergence of multiple growth centers acts as a self-generating engine that increases the overall momentum of the world economy. Valid development theory cannot limit its purview to national level policies and economic environment. It is becoming more and more necessary to consider development as a movement of global society, in which individual nations may move in different directions and advance at different rates, but remain aspects of a common movement.

Today virtually all of the known factors that support and stimulate development are more accessible and more prevalent than ever before. Education, the most essential resource for development, is far more widespread than at any time in history. Technology is far more available and so are trained people to operate it. Information, that most powerful catalyst of human initiative, is more easily obtainable through the very rapid expansion of the press, journals, telephones and fax machines, satellite television and data linkages. Investment, once thought to be a critical constraint, is pouring into developing countries and pouring from household savings into new productive enterprises. Management know-how, a traditional weakness in most developing countries, has also improved dramatically.

Development theory needs to explain the process by which these potentials are created and their role in development. It needs to explain how they combine and interact to determine the direction and speed of social progress. At the same time it should be able to account for the fact that in most instances the actual exploitation of opportunities falls far short of the potential and lags far behind the maximum pace achievable or already achieved by some other societies. Solutions are known for many of the most severe problems of development, yet these problems persist. If the unseen potentials are far more prevalent than most people conceive, the unseen barriers to progress also seem to be much more obstructive. Observation of social progress reveals three recurring types of obstacles to development – limited perception, out-dated attitudes and anachronistic behaviors.

One of the most striking characteristics of development discernible in all periods, countries and fields of activity has been the inability of society to envision or foresee its own future destiny. This attribute is usually accompanied by the contrary tendency to perceive opportunities as insurmountable obstacles. Innumerable times in history, humanity has come face to face with what it believed was a dead end to progress, only to discover sooner or later a way around or through the dead end to open up a wider field of opportunities. This description is literally applicable to the search by European seafarers for a sea route to Asia. In the 15^th Century, a great number of Portuguese vessels were dispatched in search of a route around Africa, but all of them were repelled by an impenetrable barrier when they reached the tiny Cape Bojador midway down the Western coast of the continent. The barrier was the widespread belief that Bojador represented the edge of the world and that to sail beyond it was certain death. It took persistent efforts by Prince Henry, 12 expeditions, and a very large purse to persuade one bold captain to skirt the cape and break the perceptual wall. Once done, Portugal soon discovered the Southern route to India and became a leading mercantile power.

Today humanity no longer fears the end of the earth, but powerful perceptual barriers still exist with regard to employment, technology, trade, environment, corruption, inflation and population that represent very real barriers to development the world over. Malthus was not the only one to foresee imminent doom where in fact there was enormous opportunity. In 1950 Holland’s population exceeded 5 million, reaching a density that many believed approached the ultimate limits that this tiny landmass could support. Today the Netherlands has 15 million people, almost three times the population density, yet it ranks among the most prosperous nations in the world and is a major food exporter. In the mid 1960s, India suffered from two successive years of drought and was on the verge of severe famine. An expert team sent to India by the Food and Agricultural Organization estimated that the country’s food grain production would rise by a maximum of 10% before 1970. Many Indian scientists shared this pessimistic view. Actually grain production rose 50 percent during this period and doubled within a decade to make the country self-sufficient in food grains. Had India’s leaders shared the view of the experts, the Green Revolution may never have been attempted.

Errors in assessment of future possibilities occur when we make projections of future performance on the basis of historical trends, even though changing circumstances have radically altered the environment. The development of the high yielding varieties of wheat and rice dramatically altered the equation for food production, yet was not factored into the assessment of what could be achieved. Looking forward, we often see apparently insurmountable obstacles to future progress. Looking backwards, we discover continuity and progress. History has shown time and again that there are no dead ends, only people who are unable to see the opportunities and solutions concealed behind the immediate obstacles.

The most persistent obstacles to human development are not physical barriers, but out-dated attitudes. The original Iron Curtain across Europe was not established by the Soviet Government after World War II. It was put up by Turkish Muslims during the Middle Ages to prevent Christian infidels from establishing a direct overland trade route to Asia. This impenetrable barrier to land transit through the Middle East forced the Europeans to seek a sea route, eventually leading to the Portuguese discovery. Once found, direct sea trade developed and the Middle East lost the opportunity to be the central trade route between Europe and the Far East.

For a brief period in the 13^th Century Korea led the world in printing technology, introducing the use of metal for making printing blocks. This distinguished position was short-lived because Korean scholars refused to accept a 25 character phonetic alphabet that King Sejong developed to replace the thousands of Chinese ideographic characters then in use. A human attitude barred the way to a nation’s progress. Korea’s printers were soon left behind by developments elsewhere.

Fifteenth century China possessed a navy unparalleled in size, skills and technology, but their expeditions led only to dead ends. The purpose of these expeditions was to display the splendor and prowess of the Chinese emperors. They obstinately resisted foreign ways of life and discouraged trade. The Chinese developed a traditional immunity to world experience. Confucian teachings would accommodate and sequester the most astonishing novelties that mariners found. A Great Wall of the mind separated China from the rest of the planet. Ultimately, threats from the Mongols made the Chinese emperors ban all marine ventures. Fully equipped with technology, intelligence and national resources to become great discoverers, an attitude doomed them to become the discovered.

The science of medicine developed very slowly in Europe due to the reluctance of physicians to share their successful remedies, until the establishment of the Royal Society of Physicians in the 18^th Century led to more open exchange of information, support for research and medical education. One of the deepest and the most widespread of human prejudices has been faith in the unaided, unmediated human senses. When the telescope was invented for seeing at a distance, prudent people were reluctant to allow the firsthand evidence of their sight to be overruled by some dubious novel device. The eminent geographer Cremonini refused to waste his time looking through Galileo's contraption just to see what "no one but Galileo had seen.... and besides, looking through those spectacles gives me a headache." A famous mathematician, Father Clarius, said Galileo first built satellite and star-like objects into the telescope glass and then pretended to see them in the sky. Distrust of the new was for long an obstacle to the development of science. Four centuries later, Charles Darwin railed against the superstitious resistance of elder scientists to ideas that contradicted established theory, going so far as to suggest an age limit on membership in scientific associations.

The absence of roads in many parts of rural France kept the population isolated, poor, uneducated and culturally backward until late in the last century. A proposal for construction of roads in rural Gascony met with strong popular resistance because people feared that it would make them vulnerable to theft. Only after the roads were finally built did the rural population come to understand the enormous practical benefits roads provided by opening markets for farm produce and bringing modern medicine, education and manufactured goods to the countryside. The resistance of French peasants to efforts by the Government to spread education arose from the belief that reading and writing were totally irrelevant to their lives.

Today outmoded attitudes bar social advancement in every field. The expansion of world trade after 1950 has been a tremendous force for stimulating job creation and raising living standards around the world. Yet fear and resistance to expansion of trade persists among Americans and Canadians to the North American Free Trade Association, among Europeans to closer economic and monetary union, and among people in every country to freer international trade under the World Trade Organization.

Development is also retarded by a plethora of anachronisms which have no other raison d’être than the momentum of past habits that refuse to die. High rates of childbirth have been traditionally practiced by the poor all over the world to compensate for high rates of infant mortality. Yet even after the introduction of modern medical technology in developing countries drastically reduced infant mortality rates in the 1950s, rates of child birth remained at high levels and have taken decades to decline to a degree commensurate with improved infant survival rates. Traditional behaviors have been slow to change until the population became more educated.

Clock makers' guilds were begun in Paris (1544) and London (1630) to enforce monopolies against foreign goods. The French guilds excluded new talent, imposed exorbitant dues on their members, and restricted the number of apprentices. The English guilds were less constricting and more favorable to development of the clock makers' crafts. When demand surged for seafaring clocks and better scientific instruments of all sorts by the mercantile powers, English clock-makers were free to respond to the opportunity and prosper.

Gold was a popular form for saving personal wealth and a hedge against inflation in many countries prior to the establishment of reliable banking systems. The safety of banks and the higher returns available from other forms of investment have gradually diminished the importance of gold as a form of savings. In some Asian countries, the traditional habit of saving and paying dowry in the form of gold jewelry has continued unabated, even after more secure and financially attractive forms of savings became widely available. The people of India possess nearly 30,000 metric tons of gold valued at $300 billion, an amount roughly twice the value of the public deposits held by Indian banks. Because India must import gold for conversion into jewelry, this form of savings removes liquidity from the national economy and prevents the reinvestment of personal savings in productive activities within the country. At a time when hundreds of billions of dollars are desperately needed for investment in roads, power plants and telecommunications infrastructure, an anachronistic habit forces the nation to depend on foreign investors while it sits on a huge hoard of untapped wealth.

UNDP has calculated that $40 billion a year would be sufficient to eradicate global poverty within ten years. Yet long after the end of the Cold War and at a time when there is not even a serious potential enemy in sight, world military expenditure remains at $850 billion a year. The war is over, but a costly, wasteful, unproductive anachronism persists.

It is possible to cite instances in which perceptual blind spots, unwarranted fears, provincial attitudes and anachronistic habits limit development in every country and every field of life. The rare few that are willing to concede that physical resources may not impose severe limits on human progress are very likely to insist that the fixed character of human nature does. History contains a record of infinite potentials discovered and countless opportunities missed due to a lack of perception, tradition-bound attitudes and insistence on anachronistic behaviors. But history also reports innumerable instances in which humanity has demonstrated the capacity to draw appropriate knowledge from its experience, overcome its limited vision and fixed behaviors and take major developmental leaps forward. In his introduction to the Brandt Commission Report, Former German Chancellor Willy Brandt expressed his hope that the problems created by men can be solved by men. Any attempt to formulate a comprehensive theory of social development must reflect the central role of human beings in both determining and overcoming self-imposed limits on social progress.

Current debate in the field of development often focuses on the importance that should be given to different economic and social outcomes and the most effective policies to achieve them. Although this discussion has importance, it tends to distract attention from more fundamental issues that need to be addressed, regardless of which goals are accorded the highest priority.

A theory of development needs to begin not with goals and policies to promote development, but with knowledge of the essential nature and characteristics of development itself, for development is not a set of policies or programs or results. It is a process. This process has been taking place in societies since time immemorial, but it has acquired greater intensity and velocity during the past five hundred years and has accelerated rapidly over the past five decades. In the broadest terms applicable to all societies and historical periods, development can be defined as an upward directional movement of society from lesser to greater levels of energy, efficiency, quality, productivity, complexity, comprehension, creativity, mastery, enjoyment and accomplishment.

Although the term development is most commonly applied to economic advancement, the term applies equally to political, social and technological progress as well. Indeed, it is extremely difficult to extricate any of these fields of change entirely from the others, for they are all various expressions or dimensions of the wider development of the human collective. However, for the purposes of this discussion, we propose to focus on the field of economic development and consider other fields only at the points where they most directly interact with and influence economic progress. At the same time, we will try to establish that the same process and the same principles are applicable to all other fields of social life as well.

Many factors influence and determine the outcome of this process. There must be a motive force that drives social change, some essential preconditions for that change to occur, barriers that obstruct the process, a variety of resources such as capital and technology which contribute to the process, along with several types and levels of infrastructure that support it. All of these factors need to find an appropriate place in a comprehensive theory. However, there is one central characteristic that most clearly distinguishes development from other forms of social change, but whose importance may not always be appreciated because it is largely non-material in nature. That characteristic is organization. The essential nature of the process is the progressive development of social organizations and institutions that harness and direct the social energies for higher levels of accomplishment. Society develops by organizing all the knowledge, human energies and material resources at its disposal to fulfill its aspirations.

Recent thought places emphasis on human development as something distinct and different from economic growth. In establishing priorities and strategies, this distinction can be useful. There is abundant evidence to show that high rates of economic growth do not necessarily lead to rapid improvements in living standards for poorer sections of the population and that greater improvement in these living standards can be achieved by strategies that do not focus exclusively on growth. This distinction focuses on development priorities and the strategies, not on the essential nature of the development process itself.

A comprehensive theory must be human centered, but not just in the sense of insisting that human beings are the rightful beneficiaries of social progress. It has also to view human beings as the source and primary motive force for development. Development is the process of human beings developing. It is the energy of people seeking to fulfill their aspirations that serves as its driving force. People’s awareness and comprehension determines the direction of the social movement. The efficiency, productivity, innovation, creativity and organizational capacities of people determine the level of accomplishment and enjoyment. Society progresses by developing and bringing forth into expression the higher potentialities of its members. The extent of people’s education, the intensity of their aspirations and energy, the quality of their attitudes and values, skills and information are crucial determinants of the process. For this reason, we conclude that the same principles of development are applicable to the development of all levels and units of human existence -- individuals, organizations, social sectors, nations and the international community. They are all expressions of the same process by which human beings acquire greater capacities and express these capacities in more productive activities.

In earlier millennia the human resource was primarily a physical instrument for manual labor, much like other work animals. Society has now developed to the point that the individual’s mental capabilities are called more and more into play. By this process, the productivity of the human being has already risen a thousand-fold. The individual who drove a bullock cart now flies an airplane or steers a ship capable of carrying huge payloads. What an individual could or could not produce in a lifetime, he or she now produces in a month or a week or a day. This process of increasing productivity is still going on. A study of this process suggests that it could continue indefinitely and without limit. As we presently utilize only a tiny fraction of the sunlight that shines upon the earth, people presently utilize only a tiny portion of their individual potentials and social opportunities. Societies also utilize only a tiny portion of their potentials. The most limiting barriers to human development are not physical. They are limitations in knowledge, vision, attitudes and aspiration for higher accomplishment. A valid theory must be able to explain the central role of these intangible factors in the development process.

Our definition of development distinguishes it from two other social processes, survival and growth. Survival is the process by which a community sustains itself at the minimum level needed for its existence without any manifest tendencies for horizontal expansion or vertical advancement. A society existing at the level of survival has sufficient energy to meet the most basic human needs, but no surplus available to enhance life at the present level or to direct toward higher levels of achievement.

At the next level are societies that have grown beyond the minimum level needed for survival, but remain organized along the same lines as in the past. People in these societies may be spurred by the availability of improved technology or the example of other communities to increase their level of effort, expand the scope of their activities, and adopt modified methods or techniques, but life remains organized essentially the same as before. A quadrupling of oil prices in the mid 1970s enabled oil exporting countries in the Middle East to dramatically increase GDP and per capita incomes with little change in the organization or productivity of the society. Since Okinawa was returned to Japan by the USA in 1972, the heavy dependence of the island economy on US military bases has been replaced by dependence on transfer payments and investments in infrastructure by the Japanese Government, resulting in higher incomes and improved living standards. But the basic organization of economic activities remains the same.

Development is distinguished from survival and growth by the emergence of new or higher levels of organization. In this case there is not merely a quantitative increase in the level of activity or accomplishment but a qualitative change in the way the activity is carried out in society. Prior to the development of standing armies, the entire society was called upon to defend the community in times of war. The division of society into military and civilian components enabled the community to develop economically at the same time as it expanded or defended itself militarily. The shift from nomadic grazing to sedentary agriculture marks a major development in agriculture. Not only do the techniques differ. The organization of the activity is far more sophisticated. Instead of going out in search for harvestable crops and then migrating on to greener pastures, the farmer gathers all the necessary resources, selects and cultivates appropriate crops and sets aside a portion of the produce as seed material for the following season. The transition from a rural agrarian to an urban commercial economy, from commercial to industrial and from industrial to service economy are major developmental changes in the structure and organization of society. Similar transitions occur within each field of social activity as well.

Growth is the process of expansion or proliferation of activities at any established level of development in the continuum from primitive tribal and agrarian societies to technologically advanced industrial societies. Growth and development are distinct processes, but they are also closely interrelated, complementary and mutually supportive. Development of the society to a higher level may be preceded, accompanied or followed by significant growth in different fields. Development in narrower fields also leads to growth of the society as a whole. In either case we apply the term development to connote the qualitative vertical movement to a higher level of performance and the term growth to connote the quantitative horizontal expansion of activities at whatever level of organization the society has reached in a particular field.

The phenomenal achievements of the Marshall Plan in promoting rapid economic recovery and growth in Europe after the Second World War may have blurred the distinction between growth and development. Based on West Germany’s post war experience, it was easy to conclude that a large infusion of capital could achieve rapid advancement in the eastern part of the country. In reality, the two cases are very different. Germany’s remarkable recovery after the war is primarily an expression of growth. The physical infrastructure and industrial capacity that had been destroyed during the war were quickly rebuilt. The productive skills and social attitudes of the population were already prepared by the country’s past experience and accomplishments. They did not have to be created. In contrast, the task in East Germany since 1990 has been to rapidly establish new political, administrative and economic systems. The infusion of enormous amounts of fresh capital stimulated the growth of construction and commerce, but it has not and cannot by itself bring about these structural changes. Inadvertently it may even have aggravated the task of development by raising high expectations among the population in East Germany that their living standards would be lifted to the level of their western countrymen by central government aid and programs, rather than by their own initiative to acquire more progressive attitudes, more productive skills and more efficient social organizations.

The remainder of this paper focuses on the required conditions, essential ingredients and stages of the process of development at many different levels of society and in many different fields. Except in this context, it will not be concerned with the process of growth as it is governed and described by basic principles of economics.

Human development proceeds from experience to comprehension. In the course of development, society accumulates the experience derived from the initiative of countless individuals and gradually formulates from it a conscious understanding of the secrets of success in different fields of activity. Experience comes first and full comprehension usually comes long afterwards. In this sense, we can say that the normal process of development is subconscious in that it is carried out before this conscious understanding has been fully acquired. We use the term subconscious to refer to those instances in which human beings pursue a new line of activity in any field without a conscious knowledge of the end results toward which they are moving, the obstacles and essential conditions for success, and the stages and principles governing the process of accomplishment.

Societies progress through the combined efforts of countless individuals and small groups, most of whom are only aware of and motivated to achieve their own limited goals. Yet the adoption of shared goals and common or similar strategies by these individuals and groups is utilized to elevate the society and fulfill the underlying intentions of the social collective. That which develops is the society. The society consists of diverse and divergent groups of individuals. The accomplishments of the society are the subconscious outcome and resultant expression of the combined aspirations and efforts of this heterogeneous collective.

A further distinction needs to be made between the natural process of social development and planned development initiatives by governments. Natural development is the spontaneous, subconscious progression of society; planned development is the effort of governments to accelerate social progress through special policies and programs. Natural development is always subconscious. Planned development is mostly subconscious, but has the potential of becoming conscious, if the country’s leaders are able to acquire a comprehensive knowledge and apply it in the formulation and implementation of development strategies.

The theory needs to make clear the precise nature of the differences and similarities between planned and spontaneous development. In the case of planned development, government is the initiator of the process utilizing its capacity to set direction and policy for the society. In the case of natural development, individuals, groups of individuals and organizations are the initiators. But apart from this, is there really a fundamental distinction between the process of development in these two instances? Our conclusion is that there is not. The principles governing the process remain the same, regardless of who initiates or how it is initiated. This implies that the success of any planned development effort will depend on the degree to which it succeeds in fulfilling the conditions and imitating the stages of natural development.

One of the most dramatic illustrations of a conscious, planned development initiative by government was the Green Revolution in India. Until the mid 1960s, agriculture in India did not differ significantly from the way it was carried out during the two centuries of British colonial rule that ended in 1947. The Green Revolution involved the introduction of new hybrid varieties of wheat developed in Mexico and the term is commonly used as a synonym for the introduction of new technology in agriculture. But the most significant characteristic of Green Revolution was not technological. It was a planned initiative by the Indian Government to raise the organization of agriculture in Indian society to a higher level.

Prior to Green Revolution, the structure of Indian agriculture consisted of subsistence level farming by isolated individual producers, primarily for their own consumption. This structure generated inadequate overall production to meet the needs of an expanding population, periodic shortages and recurring threats of famine, which had only been avoided after 1947 by imports of increasingly large quantities of food grains. Green Revolution was a comprehensive and integrated strategy to transform the organization of Indian agriculture into a closely coordinated national system capable of producing sufficient surpluses to meet the needs of the entire population and to achieve national self-sufficiency in food grains.

The Indian Government recognized that to be successful, it would be necessary to convince the farmer that the new technology could generate significantly higher yields, to ensure that the higher yields would be readily purchased without a drastic fall in farm prices, to provide for large scale import and domestic production of hybrid seeds, fertilizers and pesticides, to establish sufficient warehouse capacity to store larger volumes of food grain, to undertake research and extension activities to adapt the varieties to Indian conditions, and to educate farmers, extension workers and scientists on the new agricultural practices.

The Green Revolution strategy accomplished these multiple objectives through the establishment of a number of new quasi-governmental organizations. The Food Corporation of India was set up and empowered to purchase surplus grains from production centers and distribute them for marketing in food deficit areas, effectively establishing a national market for food grains for the first time. The Agricultural Pricing Commission was constituted to guarantee farmers a remunerative price for their produce. Other agencies were established to import and expand production of essential inputs, expand warehousing facilities, coordinate agricultural research and educational activities. This comprehensive strategy provided economic incentives to the farmer for increased production as well as financial and social incentives to agricultural scientists to embrace the new technology. A national program was conducted involving 100,000 demonstration plots in farmers’ fields to convince the farmers that the new varieties would be remunerative.

Green Revolution was not only a planned initiative of the government. It was also a conscious initiative, conceived and implemented according to a time-bound plan to achieve well-defined goals and objectives very rapidly. Unlike many other planned development initiatives, it was based on a full and correct understanding of the real needs, aspirations, and preparedness of the society and on a knowledge of what was needed to release the energy and elicit the active participation of the society. The program succeeded because it was able to create a higher level of social organization and it was able to mobilize the energy, enthusiasm and capacities of scientists and farmers.

Planned development differs from natural development in that it is an attempt by government to initiate and accelerate a process of change that would otherwise take place more slowly or perhaps not at all. The success of any planned development effort depends on its ability to provide the necessary conditions and elements required for natural development. The stages that both processes must traverse and the principles that govern them are otherwise the same. Many planned development efforts fail because they are initiated with insufficient understanding of the essential conditions and the steps necessary to mimic the natural social process. In the early years, the organizational innovations launched to support the Green Revolution were primarily controlled and managed by governments. But that fact is only incidental. The important point is that these organizations were effectively integrated with the activities of the society and attuned to support its development. During the 1960s, only government in India possessed the necessary resources and organizational capabilities to bring about such a massive organizational change so rapidly. Were comparable programs to be introduced today, the private sector could be called upon to play a much more active role.

The achievement of national food self-sufficiency within five years and a doubling of total food grain production within a decade confounded the expectations of the experts and exceeded even the most optimistic projections. But the ultimate accomplishment of India’s Green Revolution was to elevate the entire social organization of agricultural production and marketing in the country to a far higher level. This remarkable achievement illustrates the power of planned development when it is undertaken with conscious knowledge

If the emergence of more complex and efficient levels of organization is the essential characteristic of development, then we must ask what is the process that stimulates the emergence of new organizations, what are the stages through which it proceeds and the agents that determine its direction. The theory must be able to adequately explain the conditions that determine the onset of new activities, the response of society to the activities, and the speed of their propagation.

It is our view that development occurs when the subconscious preparedness of society leads to generates new ideas and conscious initiatives by individuals. The accumulated surplus energy of society releases the initiative of pioneers who apply new ideas, acquire new skills and introduce new types of activities. Imitation of successful pioneers eventually attracts the attention and overcomes the resistance of conservative forces in society, leading the society to accept and embrace the new activity by establishing customs, laws, and other organizational mechanisms to actively support its propagation. At a further stage the activity is promoted through education and family until it becomes a social institution and is assimilated into the social culture. This process can be described in terms of three phases: social preparedness, the initiative of pioneers, and assimilation by the society.

The potentials for development always far exceed the initiative of society to exploit them. The actual achievements of society depend on the measure that it is ready to actively respond to new opportunities and challenges. That response is the real determinant of development. Three fundamental conditions determine a society’s level of preparedness: energy, awareness and aspiration.

The first condition is the availability of surplus energy. Development is an expression of social creativity. It requires an immense investment of creative energy for society to experiment with new modes of activity, take the risks associated with change, break the active resistance and passive inertia of fixed habits, raise standards of functioning to higher levels, acquire new skills and build higher order organizations. Moving from one level of social organization to another requires the accumulation of surplus energy as in the conversion of matter from a liquid to a gaseous state. Development is the result of surplus energy moving vertically and being organized at a higher level, rather than merely being expended in horizontal expansion at the same level. The higher level organization is able to utilize the energy more productively.

Surplus energy is available only when the society is not fully absorbed in meeting the challenges of existence at the current level. The production of material surpluses and high levels of movement and exchange are indices that surplus energy is available for development. Surpluses are a measure of accomplishment and mastery at the previous level of development. The accumulation of surpluses has been a stimulus for growth of civilizations throughout history. The production of agricultural surpluses by Athenian farmers prompted Athens to open up trade routes and become a major commercial power in the ancient world. Arthur Lewis noted the central role played in the Industrial Revolution by the growing prosperity of English farmers resulting from the commercialization of English agriculture in the previous century.

The generation of new ideas, scientific experimentation and technical innovation are also symptomatic of surplus energy. When material needs are met and social activities have become highly organized, the mind becomes increasingly active and creative. People conceive of new possibilities and mentally explore new opportunities. The breakdown of feudalism and waning of Church authority in Western Europe unleashed an explosion of new ideas and creativity during the Renaissance. The energy liberated by greater political, social and intellectual freedom ushered in the great mercantile age.

Energy is the fuel for growth in individuals, organizations and societies. Highly creative and accomplished people are often characterized by the high levels of energy they exude and by their capacity for non-stop work. Indomitable energy has been an outstanding trait of great political leaders such as Napoleon, Churchill and Gandhi and business leaders such as Andrew Carnegie, Henry Ford, and Tom Watson of IBM. Inventor Thomas Alva Edison was known to work for days on end without sleep in the process of developing 1,100 patentable inventions and founding the General Electric Company. Organizations that are growing rapidly share the same characteristic, which is apparent even to casual visitors to high tech companies in Silicon Valley. Energy is highly visible in progressive urban centers around the globe, from New York and London to Hong Kong and Tokyo. It is, therefore, not surprising that this characteristic is found abundant in societies that have achieved high levels of development or that it becomes increasingly pervasive as societies enter the take-off phase.

The importance of surplus energy is most dramatically illustrated by two conditions under which it is unable to accumulate or express itself – war and dictatorship. War destroys infrastructure and interferes with production and trade. It physically saps the energy and resources of a country. The threat of war keeps those energies perpetually directed toward self-defense, rather than self-development. Dictatorship, on the other hand, can spur development efforts up to a point, using the threat or pressure of coercion to channel initiative in desired directions. But dictatorship also blocks the free emergence of new ideas and fresh initiatives, which are the seeds of social innovation. It can ensure obedience to authority but does not spur entrepreneurship and innovation. The end of feudalism in Western Europe was an important contributor to the onset of the mercantile era and the founding of the great European commercial empires. The further transition from monarchy to democracy stabilized the internal order and provided the social foundations for the Industrial Revolution. It stimulated innovation by encouraging the free exchange of ideas and provided incentives for greater individual effort by legally safeguarding property from arbitrary confiscation.

Surplus social energy collects as potential beneath the surface, accumulating until it acquires sufficient force to burst out in new activities. It expresses initially in society as increasing thought and discussion about new possibilities, an urge for innovation and improvement, and growing dissatisfaction with the status quo. But the mobilization of this energy for action depends on fulfillment of a second essential condition -- awareness of new development opportunities and challenges. Societies that are fully consumed by the struggle for survival have little time or inclination to direct their attention outward to observe what other societies are accomplishing or forward to envision new possibilities. When life reaches a certain level of stable comfort, societies become increasingly interested in and aware of what is going on in the world around them. This awareness may also be thrust on a society by the unwanted intrusion of an external influence. The influx of English manufactured goods into the pre-industrial economies of Europe and the arrival of a modern armed American fleet in Tokyo harbor in the 19^th Century both had the effect of awakening societies to the opportunities and challenges of development and stimulating them to respond.

The increasing pace of development over the past five centuries is directly linked to an increase in the speed and reliability of information about what is taking place in other parts of the country, region and world due to improvements in communication and transportation. The proliferation of books and newspapers following the invention and diffusion of the printing press and the growth of international shipping following the invention of navigation aids beginning in the 15^th Century, the growth of railways, telegraph, and telephones in the 19^th Century, and the impact of radio, film, television, computers and satellite technology in the 20^th Century have exponentially multiplied the dissemination of information and the general level of social awareness. Today more than 60,000 newspapers are published around the globe, including 8000 dailies, with a combined circulation of 500 million and an estimated readership of 1.5 billion people.

Energy provides the fuel and awareness helps to set the direction for social progress, but one other condition must be met to unleash the development process. The society must feel a strong aspiration or felt need for achievement at a higher level that spurs efforts to convert a perceived possibility into a material reality. Social development is an expression of social will seeking to elevate the performance of the collective. As the society becomes more conscious of the external environment and its own internal potentials, its aspiration and will for progress increase. The greater the knowledge of its potentials, the greater the aspiration.

History tells us of many accomplished societies in the past that generated surplus wealth and leisure time and yet chose not to respond to opportunities, even when presented with information about the successful accomplishments of other societies. Many development workers have encountered communities in which the aspiration for further development appeared to be absent. Such incidences contradict prevalent assumptions about human motivation and are often dismissed as bizarre or primitive exceptions. A closer observation reveals that this phenomenon is far more common than we may assume in societies, organizations and individuals. The theory needs to explain the circumstances under which the motivation for development is released as well as those under which it may be curtailed by accomplishment.

Awareness of a development opportunity also fails to evoke a response from the population when it is perceived to be beyond their means to accomplish. This explains why poorer individuals and societies sometimes do not respond to the accomplishments of the rich, even when the same opportunity is open to all, why the less educated assume they cannot emulate the achievements of the more educated, and why rural communities may ignore the achievements of urban centers.

Failures to respond to opportunities arising out of a sense of social superiority or social inferiority are expressions of a common principle. People respond to the example of those with whom they identify socially. When there is awareness of a developmental achievement by one belonging to the same social and cultural context, it can evoke a powerful urge for accomplishment in society. When the achievement is by one who lies outside the context, it is often ignored. Thus, the adoption of new crops and cultivation practices by a wealthy farmer may not lead to similar behavior by smaller farmers in the same community. Age, social status, class, caste, wealth, occupation and other factors help define social identity.

There was a time when different societies, classes and groups within societies differed widely in the extent to which they manifested an aspiration for development. This is no longer as true. Over the past five decades both awareness of the possibility and the release of the aspiration for development have been spreading rapidly from one country and level of society to another. Harlan Cleveland coined the phrase "revolution of rising expectations" to describe this phenomenon which he observed in Eastern Asia in the early 1950s. Spurred by the end of colonialism and the diffusion of democracy, since then this revolution has circled the globe and ignited a clamor for education, higher levels of consumption and opportunities for advancement among billions of people. The universal awakening of this urge for progress is another compelling reason why the speed of development is increasing so rapidly.

This principle has important implications for planned development efforts. It implies that efforts by government to initiate development will only be successful in areas where the necessary social urge and preparedness already exist. Many well-conceived development initiatives fail to catch on or go awry because the leaders try to accomplish what the population has not yet come to aspire for. In these instances, the planned initiative can only contribute to preparing the society for readiness at some future date, but will not generate immediate results.

Surplus energy, awareness of opportunities and aspiration for advancement are pre-conditions that prepare society for new development initiatives. This is not a linear process. The three factors interact with one another in complex ways to generate a growing pressure and ground swell of new activities. Accomplishment at a previous level helps release energy and aspiration for further accomplishment. Energy makes for greater alertness and awareness. Awareness of what others are doing evokes greater aspirations and provokes energetic responses. The process spirals back on itself, constantly reinforcing the forward momentum, while at the same time each new level of achievement brings a certain measure of satisfaction and security that relieve the pressure for further effort. Alternations between rising urge and rising satisfaction are one reason for the modulating rhythm of progress and stagnation that is often observed.

When these three factors are present in requisite measure, the society is subconsciously prepared for change. But it still needs an agent through which to express this preparedness in action. In natural development, that is the role of pioneering individuals. Once the society is prepared, sooner or later it gives rise to the initiative of one or more pioneering individuals who break out from the existing mold and attempt something new. Although exceptional and eccentric individuals may initiate new activities in any society, these activities usually disappear with passing of their founder or give rise to isolated imitation that never acquires significant momentum. The development pioneer is a conscious product of the society whose aspiration and initiative give expression to the subconscious aspiration of the society in which he lives.

Every new developmental activity is initially conceived and introduced by one or a few pioneers. The pioneer is one who sees, believes in and acts upon an opportunity which others fail to see or believe in or lack the energy or courage to pursue. The pioneer exhibits a new understanding, new attitudes, new skills and behaviors different from those prevalent in the community at the time. If the pioneer’s initiative is in tune with the social aspiration and social preparedness, it inspires and encourages other dynamic individuals to imitate or improve upon the new initiative.

Pioneers play a crucial role wherever a new activity needs to be seeded in the community for the first time. The first farmer in a village to shift from rice cultivation or sugarcane to growing fruits or flowers for export; the first teacher in a rural town to leave the security of a salaried job to establish a private tutorial institute, and the first industrialist to acquire a new manufacturing technology from overseas all serve as role models and catalysts for development in their respective fields of activity. Viewed from the perspective of the individual, it is the pioneer who initiates the collective process. But viewed from the perspective of the society, it is the collective that expresses its intention and aspiration through the initiative of the pioneer.

The role of the pioneer is vital to development, because the next stage of social progress almost always remains unseen by the collective. It is the free thinking, far seeking individual who dares to imagine or conceive what the popular mind is unaware of and then translates that vague possibility into a reality which all can see. Henry Ford became a pioneer and model for American industry early in this century by popularizing methods for mass production. Fred Smith, founder of Federal Express, pioneered creation of a new industry, the overnight parcel delivery business. The pioneer is usually not a rare exception or anomaly in society. He shares to a large degree its aspirations, knowledge and values. By acquiring one new or different attribute or behavior, he charts a new course and reveals a new possibility, all the time basing himself on the society’s present accomplishments and in most cases moving in a direction which the society has already indicated.

It does not really matter whether pioneers come forward on their own internal prompting or in response to an opportunity or demonstration created by government. In either case, the individual embodies and represents the social initiative. What does matter is the response of the society to the pioneer. Often the early pioneer meets with a response of indifference, resistance, contempt or hostility from the community around him, especially when his actions represent a radical departure from the status quo. This usually occurs when the pioneer comes too much before his time, before the society is fully ready to act on its urge for something new. At other times the successful pioneer is actively admired and respected, yet no one else comes forward to imitate his success. In either case, the pioneer’s initiative fails to catch on. If the pioneer pushes through change before the society is fully prepared, the change comes abruptly in the form of a revolution. If the society is fully prepared to accept and follow the pioneer, then the change occurs by a smooth evolution. Revolution is premature evolution.

Under appropriate conditions, the success of the pioneer leads to active imitation by other adventurous individuals who in turn serve as models for still others to imitate. In this case, the initiative of the pioneer gets multiplied over and over, rippling through the society and unleashing a development movement. The establishment of the first retail photocopy shop at a prominent location in New Delhi in the late 1970s by the owner of a typing service was an initiative whose time was right. Competing typing companies in the city quickly imitated the pioneer. Within three years the new business had spread like wildfire throughout the country. The adventurous farmer who dug the first successful borewell in a poor, backward South Indian village was initially an isolated example that others refused to follow. But when other farmers in the village saw how the pioneer’s social position was elevated by his new-found wealth, every other farmer in the village rushed to emulate him. Within two years, 440 new wells had been dug in ten surrounding villages. When India’s first software export company was founded in the 1970s, it was difficult for anyone to conceive that within a short span of time hundreds of companies would follow its example. Today India has become a world class competitor in software services with exports projected to exceed $6 billion by year 2000. Knowing how to create the appropriate conditions for unleashing the multiplier effect is essential for formulating effective planned development strategies.

The surplus energy accumulated by the society and given expression through the initiative of pioneers and their followers does not gain momentum until it becomes accepted and organized by the society. The process of organization may take many different forms. It may occur by the enactment of new laws or regulations that support the activity or it may be in the form of a new system or accepted set of practices. Each development advance of the society ushers in new and higher levels of organization. Rapid expansion of commerce in Europe during the 16^th and 17^th Centuries necessitated development of the banking system throughout Europe, as well as commercial laws and courts for civil arbitration. The huge sums required for investment in international trade gave rise to the creation of new legal entities, such as the joint stock company, which enabled individual investors to pool resources.

Each significant developmental advance leads to the emergence of a host of new organizations designed to support it and puts pressure on existing organizations to elevate their functioning to meet the higher demands of the new phase. Since 1950, country after country has been introducing organizational systems and structures to support modern business and international trade, such as business directories, franchising, lease purchase financing for industrial and consumer products, courier delivery services, credit rating and collection agencies, industrial estates, free trade zones, credit card and ATM banking services, cellular and pager communication systems, and most recently a completely new range of Internet services. Each of these organizational innovations increases the range, scope, quality, convenience, productivity or efficiency with which the available social energies can be utilized for productive purposes. The role of these organizations is most apparent in instances when they are absent. When the countries of Eastern Europe began the transition from centrally planned to market economies, they lacked many of supporting structures and practices needed for a market system to operate effectively.

One of the most effective ways in which society actively supports the organization of new activities is through the organization of formal educational and vocational training programs.

At a further stage, the society accepts and assimilates the new way of functioning to such an extent that it no longer requires the support of specialized organizations, policies or laws to promote it. The activity becomes a part of the normal way the society functions. It becomes a way of life. It matures from the stage of organization to institution. An organization matures into an institution when the social acceptance becomes total. An organization is maintained by human or social agencies. An institution is self-existent. It is supported by the customs, beliefs and social tradition. It does not require agents to support and maintain it. Law is an organization upheld by the power and authority of the legislature and legislative systems, police and penal systems, courts and judicial systems. Competition is an institution upheld by the weight of social tradition that is imparted to the individual by the family, fostered through the educational system and embodied in the free enterprise system, but not dependent on any of these agencies for its existence and expression. Organizations at one stage of development give rise to institutions at a later stage. The maturation of a new activity does not necessarily mean that the formal organizations established to support it disappear, but rather they are no longer an essential support for its existence.

At an advanced stage in the maturation of a new social activity, the family assumes an active role in its propagation. Family is a miniature of the society. The basic organization of society comes from the organization of family. Family imparts essential social training to its members in self-restraint, responsibility, human relations and goal-directed behaviors. Once a new activity has been accepted as desirable by wide sections of the population, families assume an increasing role in equipping the next generation with knowledge, skills and attitudes supportive of the activity. The hereditary transmission of occupation from father to son has taken place for millennia. Today children are no longer as likely to enter the same field as their parents, but they still acquire basic skills and attitudes that influence their occupation. When an activity has matured to the point that family plays a very active role in its transmission, the activity has become a part of the culture of the society.

Viewed from a historical perspective, the process of development appears as an unlimited cornucopia perpetually spilling forth an astonishingly lavish array of new riches. A theory of development must be able to account for this phenomenal capacity of the society and reveal the source of its creative powers. This theory identifies organization as the principle source of this prodigious social creativity.

Organization is the thread out of which the fabric of development is woven. Every step of social advancement involves an elevation in the way acts are carried out. Organization is a tremendous creative power. Henry Ford’s organization of manufacturing operations enabled him to increase automobile production 500-fold, with a small amount of capital and without any significant advancement in technology. When Ford introduced the system of mass production, the average US car-maker produced 1000 to 2000 cars a year. Ford raised production to over one million cars a year. Between 1908 and 1927, his company produced more than 15 million automobiles. In the process, he reduced the time required for assembling a chassis from 728 minutes of one worker’s time to 93 minutes and brought down the price of the cars he sold from $950 to $290. Starting out with a cash base of $28,000 in 1903, by 1927 the company had accumulated a cash surplus of nearly $700 million – a 25,000-fold increase in 24 years! In the 21^st Century organization will fully emerge as the primary source of productivity and wealth.

What then is the source of the vast productive power of organization? Action or work is physical. Organization is a power of the human mind. Mind has the capacity to relate and combine individual acts to form systems that can be repeated over and over again to accomplish the maximum results with the least investment of time, energy and resources. Systems are miniature organizations. Social organizations are collections of systems coordinated in space and time to achieve specific results. The introduction of organization elevates action from the physical to the mental level. A market is a simple form of organization to bring together buyers and sellers at a particular place and specific time for purchase or exchange of goods with less expenditure of time and energy. The more advanced the organization, the greater its capacity to channel social energies efficiently to achieve greater results. The development of retailing from the small family-owned corner store to the modern department store to the mail order catalog and the Internet illustrate the impact of increasingly sophisticated organization on any field of activity.

The development of organization in society takes place both in the horizontal and vertical plane. It spreads horizontally at each level to cover the entire society with its systems. It rises vertically to achieve higher levels of complexity and higher standards of performa3nce. The horizontal expansion of organization increases its reach and extends its access. The vertical elevation of organization raises its skills, efficiency and productivity.

Education is a mental system for organizing facts. It is also a social organization for transmitting the essence of society’s cumulative experience to future generations in a concentrated and abridged form. It combines systems for the collection and categorization of knowledge, for presentation, preparation and guidance of teachers, and for instruction and evaluation of students. Over the past few centuries the organization of education in different countries has been expanding horizontally to cover the entire population at the level of primary and secondary school level. It has also been rising vertically to attain higher levels of quality, making available a greater depth and breadth of knowledge in more fields. As an advanced manufacturing system is capable of producing enormous quantities of high quality products with minimum cost and wastage, an advanced educational system imparts the maximum knowledge and develops the mental abilities of the population to the maximum extent in the minimum time.

In a similar manner, advanced commercial organizations expand horizontally and vertically to promote the maximum volume of business and wealth generation. They acquire the ability to mobilize the energies and capacities of large numbers of people, to master and apply a wide array of sophisticated production technologies, to mobilize large amounts of capital, to utilize a wide range of resources and infrastructure facilities to achieve higher levels of efficiency and productivity. The horizontal expansion of the banking system enables the society to mobilize household savings and lend funds to qualified borrowers. In India a five-fold multiplication of bank branches throughout the country between 1966 and 1979 contributed to a five-fold increase in bank deposits within a 13-year period. At the same time, the establishment of higher order specialized financial agencies with expertise in specific sectors has supported growth of investment in fields such as agriculture, industry and exports. Computerization has recently begun to improve the efficiency, quality and range of banking services.

The stock exchange is an organization that enables those with surplus savings to invest in productive enterprises that require capital for their growth and that can utilize it profitability to create greater wealth. Access for investors is made possible by a system of brokers who are authorized by the exchange to buy and sell securities. Originally brokers had to be physically situated at the exchange in order to monitor performance of different stocks and perform transactions. Technology now enables brokers to access information and conduct trades from anywhere in the world. It is even permits investors to by-pass the broker and conduct transactions for themselves, thereby changing the nature of the organization. The creation of more sophisticated investment products such as mutual funds, futures and derivatives has elevated the organization of investment to a higher level that incorporates more variables and can be used to reduce the risk of specific events. As a result of these advances, the process of raising money, trading securities and investing surplus funds has been made far more productive than ever before.

The emphasis of development theory on social organizations and institutions is certainly not new. In the study cited earlier, Morris and Adelman identified five major categories of development theory that recognize the central role of institutional changes in development. These theories differ as to which institutional changes are most significant and as to the motive force that brings about these changes. None of the theories adequately explains the relationship between the social organizations that drive the development process and the underlying society that undergoes this process. Organization is simply presented as an important factor with no organic relationship to the society in which it arises. This theory attempts to show that social organizations are a natural outgrowth and projection of emerging energy, knowledge, skills and values in the society. They are at once the means and the expression of society’s development.

We have explained earlier how the initiative of the pioneer can lead to imitation by other pioneers and eventual acceptance of a new activity in society. What we are actually describing is the process by which the society acquires new skills. Individuals or organized group of individuals attempt a new activity one or more times until they discover a way to conduct the activity successfully. In the process, they acquire the knowledge, skills and values necessary for the new activity. Those who imitate the pioneers also acquire these knowledge, skills and values. At a later stage the society learns how to encourage and support the new activity on a wider scale. It does this by disseminating the knowledge, skills and values acquired by individuals in the past and by institutionalizing them in the form of social systems. The activity matures into an organization. The acquisition by the society of the capacity to propagate the new activity is the acquisition of a new skill by the society.

Society is a developing organization of activities. A crucial determinant of social productivity is society’s capacity for coordinated, systematic functioning. Individuals increase their productivity and effectiveness by acquiring and applying higher and higher levels of physical, social and mental skills to carry out their activities. Skills enable the individual to channel and control physical movements and nervous energies to achieve mental objectives. In the absence of skills, energy is wasted and results are poor. The difference in productivity between the untrained two-fingered typist and the professional secretary may be tenfold or more. The difference in quality between the amateur violinist and the accomplished maestro is immeasurable.

The same differences exist in the quality and productivity of work in organizations and societies. Commercial organizations rise in effectiveness by elevating the quality of the systems they employ to perform routine functions. Systems are the skills of an organization that channel and direct its energies for maximum results. The remarkable growth of the Ford Motor Company was achieved by introducing a complex arrangement of physical and administrative systems designed to control the flow of materials, parts and finished products through 50,000 square feet of chutes, conveyors, tubes, hoists and assembly lines and to track purchases, inventory, job routing, labor productivity, shipping and accounting transactions with great precision. So elaborate and impressive was the organization that it prompted a reporter for a local newspaper to sum up his impression of the new factory in three words, "System, System, System."

Like the individual and the organization, societies develop by effectively directing and channeling their energies by continuously increasing the organizational efficiency with which they execute every type of activity. As skills direct the energies of the individual and systems direct the energies of the organization, organizations direct the energies of the society. Organizations constitute the skills of society. These social systems are of many types, both formal and informal. They cover the actions and interactions within and between every field of social activity. A comparison of any two countries at different levels of development will reveal significant differences in the level and sophistication of the systems they employ to carry out activities. The effectiveness of organization is determined by its authority, complexity, and capacity for coordination and integration with social needs.

Organization is the mechanism by which the surplus energy in society is harnessed, mobilized, directed and channeled to produce greater results. Organization derives energy from being integrated with the society in which it functions. The energy of the society comes from its needs and aspirations. This energy pervades the social organizations established to meet these needs. The more finely the organization is tuned to fulfill underlying social aspirations, the greater the energy flowing through it. Development does not occur by the mere importation and superimposition of foreign institutions. The organization of East India Companies by several European powers expressed the competitive urge of these countries for imperial expansion overseas. These companies were backed by the political, military and productive energies of the nations they represented. The organizations they established in the colonies were integrated with the needs and aspirations of the homeland, not those of the colonies.

The will of the society changes over time as old attitudes and goals are replaced with new ones. Organizations that adapt to these changes continue to thrive. Those that remain fixed in the past mold decline, become ineffective and are eventually discarded or fade away as the East India Companies faded in the light of more civilized values in the 20^th Century. When India gained Independence, the Indian military was able to survive and make a smooth transition from functioning under the British colonial administration to functioning under a democratically elected government because its essential task remained maintenance of national security. In contrast the Indian banking system had to undergo radical change from serving the interests of a few large exporters and importers to financing agricultural and industrial activities of millions of small producers. Since the banks were nationalized in 1970, bank deposits have increased more than 100 times, because their policies and practices were drastically reoriented to serve the changing priorities of the country.

Development involves the emergence in society of organizations that reflect the aspirations of the society and are fashioned in consonance with its cultural values and ways of life. The imposition or blind imitation of external models of organization may result in artificial forms of organization that at best partially channel the social energies for development. Japan developed rapidly because it possessed the knack for adapting and molding Western institutions to its own social and cultural context. East European countries have encountered seriously difficulties and achieved disappointing results by wholesale import of Western models.

Organization derives productive power from authority. What distinguishes an organized social collective from a mob? The organized collective mobilizes and directs the energies and capacities of people in a controlled manner to carry out purposeful activities, whereas the mob unleashes pent-up energies in an uncontrolled manner for destruction. The capacity to control and govern human energies is an essential characteristic of all organizations.

The first human collectives most probably consisted of bands of hunters working together to obtain food and protect the members of the group. Formation of a hunting collective required the identification of a leader who could direct the actions of the group, give instructions and enforce discipline. The primary qualifications for leadership were physical strength and fighting prowess, that is, the capacity to physically enforce authority over other members of the group. Authority was essential to maintain order and discipline within the group regarding the sharing of food and work responsibilities as well as to demand courageous self-sacrifice of members in times of war. The greater the strength of the leader, the greater the stability, internal order and fighting capacity of the group. The maturation of the hunting group into an army involved a further development of organization. The military leader appointed a hierarchy of officers, each empowered with specific limits of authority. Strict obedience to those in command and unquestioned execution of instructions endowed the organized army with far greater strength.

Organizations derive power from internal authority and discipline. Western society’s reverence for freedom and individual liberty has sometimes eclipsed the vital role of authority in social organization. Without it, no organization and no society can exist or function for a moment. The greater the authority under which individuals function, the greater the accomplishment. As society progressed from the primitive fighting group to more advanced forms of human collective, the center of authority gradually shifted from the military to other centers in society. Religious, academic, administrative, political and commercial centers of power became increasingly important. The distribution of authority may have diluted the absolute authority of the military leader, but it enormously enhanced the overall exercise of authority in society. Whereas the military leader was primarily concerned with the exercise of authority to preserve peace and to conquer in war, these new centers of power exercised authority over what people believed, worshipped, taught their children, grew, produced, consumed, how they worked together and settled disputes, where they traded or traveled, what they could own, buy or sell. This more organized society acquired infinitely greater capacity to increase the productivity of its members.

During the last millennium, the evolution of authority in Western society moved from feudalism to absolute monarchy to democracy and rule of law. Power shifted from the landed aristocrat to the hereditary monarch and finally to the electorate. Each stage of this transition has brought with it a tremendous enhancement in the authority of society and in its overall development. The feudal lord was king unto himself within the limited confines of his own fiefdom, able to command the loyalty of his serfs in return for the barest subsistence existence but subject always to the threat of attack from other feudal lords or foreign invaders. Under feudalism, the society as a whole was organized at the level of survival and capable only of the lowest levels of productivity and development. The emergence of strong central monarchs greatly enhanced the power and productivity of society. The king was able to mobilize large armies for defense or conquest, to raise large sums as taxes to build roads or finance naval explorations, to issue money and protect property, to regulate crafts and promote trade to enhance the wealth of the country.

The further transition from monarchy to democracy has shifted power from concentration in a tiny aristocratic elite to distribute it over a large number of elected political leaders and administrative officials and through a increasingly complex system of laws and judicial mechanisms. At the same time democracy has extended the authority of the state enormously. In addition to maintenance of law and order and national defense, governments today exercise extensive and detailed authority over almost every aspect of life, including all forms of transportation and communication, manufacturing, export and import, banking, investment, employment, health, insurance, zoning, construction, broadcasting and preservation of the environment. Government in most countries today is the single largest employer and most of these employees exercise a measure of authority over some aspect of social life.

Contemporary thought emphasizes the limits of authority as a means for accomplishment. Under certain circumstances and up to a certain point, the imposition of authority from outside in the form of discipline and compulsion can be effective, as it was in propelling the remarkable economic and scientific achievements of Soviet Russia after the devastating effects of World War II. However, external authority is limited in its efficacy to what can be demanded of the individual or compelled by threat of punishment. It cannot produce the individual initiative, dynamism, spirit of innovation and creativity which are the driving forces for higher levels of human achievement. These forces flourish only in the measure individuals internalize the authority of society and freely accept its goals, aspirations and standards of behavior as their own. The physical man responds to external compulsion. The mental man is guided by the authority of his knowledge, opinions, attitudes and values. The transition of society from monarchy to democracy marks the replacement of external authority by internal motivation as the driving force for social development. Wherever this change has taken firm root, the productivity and development of society have increased enormously.

The central importance of authority for social development is strikingly apparent in some of the countries of the former Soviet Union today, where the authority of the state and the society have been seriously eroded. In implementing transition strategies, many people in these countries had the mistaken impression that democracy and market economies thrived in the absence of regulatory authorities, so that sweeping away the old bureaucracy would dramatically improve economic performance. They failed to understand that free markets depend as much on authority as other economic systems. Eliminate the authority that prevents price collusion, the formation of monopolies, securities fraud, tax evasion, quality standards, and arbitrary confiscation of property, then markets are no longer free or efficient. The methods of enforcement may differ in a democracy, but the importance of conformity to the rules is the same. The breakdown of law and order, the rise of monopolistic conglomerates, and spread of organized crime in Eastern Europe during the last decade is clear testimony to the necessity of authority in social development.

Corruption in many developing societies today channels huge sums of money from public service to private benefit and influences policy decisions for the advantage of the few at the expense of the many. Most governments, including those of many industrialized nations, lack the capacity to fully enforce such basic measures as tax collections. However, all authority for development does not rest with governments. The assessment of a company’s financial prospects by investment bankers and public accountants, ratings of product and service quality by independent consumer groups or scientific bodies, the certification of practitioners by organizations of professionals are also expressions of authority in the society. In the absence of these agencies, consumers hesitate to purchase new products, investors are reluctant to invest, clients have no way to determine the qualifications of lawyers and doctors, and so forth.

The ultimate source of organizational authority is the social will of the collective. To the extent that organizations are tuned to fulfill the aspirations of the society, they acquire authority. This authority may come by informal consent of those who participate in or benefit from the activities of the organization or by formal legal enactment. The right of consumers to protection from dishonest trade practices began as a social aspiration that was reflected in the consumer oriented policies of progressive retailers such as Sears. Later what the society had informally accepted as proper was augmented by specific laws defining the rights of consumers.

One of the primary powers of organization that make it so productive is the division of labor. The division of labor did not begin with Ford’s production line. It is as old as society. It is the capacity of society to divide up the activities essential for its functioning and assign different specialized tasks to different individuals. The establishment of a permanent standing army separate from the rest of the population enabled a portion of the population to focus exclusively on productive activities while others focused on maintaining law and order and defense. Specialization of function enables people with specific endowments to do what they do best. It also enables individuals to acquire a narrow set of skills rather than trying to learn how to perform every activity for themselves. Whether for a family, a company or a society, the result of this specialization is an enormous enhancement in overall efficiency. In Ford’s factory, the combination of systems and specialization multiplied worker productivity eight times and total production 500 times.

Division of labor enables organizations to carry out vast numbers of different activities simultaneously. The greater the number of individual functions it performs, the more complex the organization. The more complex the organization, the greater its productive potential. Complexity is also enhanced by increasing the number of levels in the organizational hierarchy and the extent of coordination and integration it achieves with other organizations and activities in the same field and in other fields. Organizational complexity is powerfully enhanced by coordination between two or more separate systems or organizations. Coordination between buyers and sellers gives rise to the commodity exchange and the stock exchange. Coordination between purchasing, production and sales systems made possible the enormous improvements in efficiency and speed of delivery that have been achieved by just-in-time inventory management. Coordination of reservation, ticketing and routing systems between competing airline companies has increased the volume and reduced the cost of air travel by providing travelers with easier, more frequent connections between different airlines.

Coordination is even more powerful when it is between distinctly different types of organizations. Coordination between biotechnology and agriculture created the technology of the Green Revolution. Coordination between universities and business has aided the development and commercialization of today’s computers. Coordination between computers and telecommunication systems gave birth to the Internet. The US space program that placed a man on the moon in less than ten years was the product of one of the most complex efforts at coordination ever attempted, involving cooperation between more than 400,000 people in thousands of different public and private scientific, commercial and governmental agencies.

The introduction and assimilation of any new activity moves through a series of stages from formal organization to institution to culture. The further it progresses in this process, the more deeply and naturally it is integrated into the life of the society. The greater the integration, the more efficiently the activity is carried out and the more productive it becomes. The final stage of this process is reached when the activity is so fully accepted that it is internalized as a value of the society and is perpetuated by the customs and beliefs of the population without the need of any external or formal means of support.

A value is something whose importance is fully understood, accepted and cherished for its own sake. Whatever an individual or a society values, it dedicates itself to nourish and protect. Values are an ultimate organizing principle that direct and control the way human energies are expressed in activity. Values are the most powerful determinants of social accomplishment. They are laden with their own inherent authority. Physical skills direct the energies of the body for productive work. Opinions direct the energies of the mind, determining how it responds to opportunities and challenges. Values direct the motive force of personality to achieve higher standards of behavior and higher levels of accomplishment. Values are the psychological skills of society.

During the past fifty years there has been a mushrooming of new types of organizations established by governments to support development at the national and international level. Export promotion councils and processing zones, specialized banking and financial institutions, stock exchanges, vocational training institutes, industrial estates and industrial development agencies, employee insurance and pension funds, producers cooperatives, state transport agencies and industrial research institutes are examples.

The role of government as creator and manager of new organizations can have a great impact on development in the measure that these organizations are integrated with and strengthen the social organization. For development to take hold and gain momentum, it is essential that any efforts by government lead to a multiplication of social organizations and social initiative by the private sector as well. The principle of organization is not limited to specialized agencies such as those listed above. In its widest sense it applies to the entire range of formal and informal mechanisms that the society employs to direct, manage and control social energies, human initiative, knowledge, information, resources and activities of all types.

Emergence of inter-governmental and private organizations at the international level has been a driving force for international economic development during this century. Global linkages between national postal and telecommunications services, global news and weather bureaus, international bank clearing houses and maritime conventions, international standards, laws and environmental conventions have elevated the organization of activities worldwide and made human society as a whole far more productive. The international community represents the final frontier for social development. Today organizational arrangements at the international level lag far behind in complexity and sophistication the organization of development at the national level. The future prosperity and accomplishments of humanity depend on building up both the formal and informal, governmental and non-governmental linkages needed to utilize the immeasurable opportunities remaining to be tapped for global prosperity.

Society develops by building up higher and higher levels of organization. The establishment of each successive new layer of organization occurs as an overlay on the foundations of the society’s previous achievements. We refer to these essential foundations as the infrastructure for the next stage of development. The term infrastructure is commonly used to refer to the physical infrastructure of roads, ports, navigable rivers, railways and electric power that support economic activity. Here we give extended meaning to the term by including three other levels of infrastructure – social, mental and psychological -- that are necessary for further developmental achievements. The social infrastructure consists of all the laws, systems, administrative, commercial, productive and financial organizations – colleges, research institutes, banks, stock exchanges, courts, etc. -- built up during previous stages of development that serve as a foundation for future progress. The mental infrastructure includes the availability of information, the level of education and awareness in society, the technical knowledge and skills of the workforce. The psychological infrastructure consists of the collective social energy, aspirations, attitudes and values that make the society open to new ideas, responsive to opportunities, willing to change, dynamic and hard working – all of which are essential characteristics for rising to higher levels of development.

Infrastructure is the structure below. It is itself a level of organization supporting as a foundation further levels of organization above it. The infrastructure of highways is a physical organization of linked roads connecting major centers of population, production, trade and consumption making possible the organization of commerce, industry and tourism. The educational infrastructure consists of a network of schools, colleges and training institutions covering different levels and specialized fields making possible the dissemination of acquired knowledge and skills together with research and experimentation. The legal infrastructure includes an interdependent fabric of laws, law-makers, enforcement agencies, judicial authorities, penal institutions and legal practitioners that serve as an essential foundation for maintenance of peace, the organization of civil society and commercial activity. The established fields of knowledge in society are similarly organized into specialized subjects, branches and levels upon which further advances of knowledge are founded. Each successive level of development requires the establishment of an essential infrastructure to support it. This conception underscores the need for multiple levels and types of infrastructure for the successful development of any new activity. The results of any development initiative will depend on the strength and quality of the underlying infrastructure. Supplying missing infrastructures can have a strong energizing effect in society.

Resources are inputs or factors for carrying out an activity effectively. Infrastructure is that which enables us to create, develop and utilize a resource more effectively. Like infrastructure, we can divide resources into four broad types. Land, water, coal, oil, minerals, power and capital are physical resources. The social resources consist of the society’s capacity to manage and direct complex systems and activities. Knowledge, information, technology and the capacity to organize are mental resources. The energy, skills and capacities of people constitute the human resource.

Economics is very much concerned with the scarcity of resources. But when viewed from a wider perspective it becomes evident that while the quantity of some physical resources may be inherently limited, the notion of scarcity does not really apply to social, mental and human resources. Any of these may be limited in their immediate availability, but none are subject to inherent limits to their development. Organizational capabilities can be increased over time. The horizons of knowledge, information and technology are continuously expanding. The human resource becomes progressively more capable and productive.

As a society develops to higher levels, non-material resources play an increasingly important role as factors of production. This principle is embodied in the concept of the Information Age, an era in which access to information has become a valuable input and precious resource for improving the quality of decisions and the productivity of activities. One characteristic of information is that it is not consumed by being distributed or utilized, thus it is inexhaustible. Access to information now enables investors to move financial resources around the world instantaneously in search of higher returns. The increasing contribution of higher, non-material resources helps explain how societies have continued to expand productivity on a limited physical resource base.

Increasing the input of higher resources also makes it possible to more efficiently utilize the available material resources. Technological resources have made it possible during the past 15 years to increase the world’s proven and economically accessible oil reserves by nearly 50%, while reducing the finding cost by nearly 75%. At the same time technology has reduced the materials and energy input required for a wide range of products. As Green Revolution has made the soils of India far more productive than in the past, Dutch agricultural scientists have recently demonstrated that water too can be made much more productive in agriculture. They have shown that it actually requires only 1.4 liters of water to grow a kilogram of vegetables, compared to more than 1000 liters commonly utilized by traditional cultivation practices. Henry Ford’s organization of mas