by Garry Jacobs, Robert Macfarlane, and N. Asokan

[presented to Pacific Rim Economic Conference, Bangkok, Jan 13-18, 1998]

Despite 50 years of development experience, fundamental questions remain unanswered. The world still lacks a comprehensive theoretical framework that adequately explains such phenomenon as the accelerating velocity of development exhibited by East Asian countries, 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 unite 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 the speed of future progress.

This paper is identifies the central principle of development and traces its expression in different fields, levels and stages of expression. 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 stages in the emergence of higher, more complex, more productive levels of social organization through the historical 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 three levels of infrastructure – physical, organizational and mental. 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.

Historically, social development has passed through three progressive, but overlapping stages in which three different components of human consciousness served as primary engines for social advancement. The paper draws parallels between the catalytic role of population growth, urbanization, the spread of a money economy, and, most recently, Internet as accelerators of the development process.

Looking backward, the development achievements of the world over the past five decades have been unprecedented and remarkable. Looking forward into the next century, daunting developmental challenges confront humanity. Despite 50 years of intensive effort, the world is still blindly groping for adequate answers to fundamental questions about development and for effective strategies to accelerate the process. Recent accomplishments point to the possibility of converting these 50 years of experience into a conscious and consistent theoretical knowledge. Impending challenges point to the need for a comprehensive theory of social development that will lead to the formulation of more effective strategies.

A few observations highlight some striking aspects of recent development experience that need to be theoretically understood and some perplexing questions that need to be answered to meet the opportunities and challenges of the coming years.

1. The world has made greater progress in eradicating poverty over the past 50 years than during the previous 500: Over the past five decades, average per capita income in the world more than tripled, in spite of unprecedented population growth. In developing countries, real per capita consumption rose by 70 percent between 1965 and 1985. What have been the principle reasons for this phenomenal progress? What do these results augur for the coming decades?
2. The pace of human development has increased dramatically and is still accelerating: It took the United Kingdom 58 years, beginning in 1780, to double its 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 and South Korea in 11. More remarkably, China has doubled in the past 10 years and is on course to double again in the next eight. During the period 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. These countries have demonstrated beyond doubt that much higher rates of growth are achievable than at any time in the past. What are the factors that make possible and limit this accelerated progress? What implications does it have for nations just entering the take-off stage?
3. The rate of growth differs widely among nations and communities and the differences appear to be widening: 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. Yet despite extensive efforts to draw lessons from the impressive achievements of the Asian Tigers, no formula has emerged that is generally applicable to countries faced with differing conditions and at different stages of development. What factors account for the vast differences in performance? What valid principles can be derived from the disparities in performance?
4. Dire predictions of pending doom based on an extrapolation from past trends have been repeatedly proven wrong: Since English economist Robert Malthus first predicted 200 years ago that population growth would overtake the world’s food supply leading to widespread famine, the population of the United Kingdom has grown five-fold and world population has grown nearly six-fold. Malthus failed to anticipate the gigantic strides that would be made in increasing food production. As recently as 1990 demographers were projecting that the world’s population could rise above 13 billion before leveling off late in the next century. UN estimates have since been drastically revised downward to project that world population is likely to peak at 7.5 billion by 2050. At the same time, a group of Dutch researchers calculates that the earth’s soil and water resources can produce sufficient food to support further growth of the world’s population from six billion to 45 billion. What principle, facts or misjudgments can account for this repeated tendency to predict insurmountable obstacles and catastrophes while overlooking emerging opportunities and increasing human capacities? What lessons can we learn from errors of thinkers in the past to avoid applying the same flawed methodology to our own analysis of the future?
5. The limits to growth appear to advance and recede before out very eyes: For decades, concerned groups of environmentalists have been predicting imminent exhaustion of the world’s energy resources. At the same time new sources of energy are being discovered and commercialized, new types of materials are being created to replace scarce ones, and more efficient means of utilizing resources are being developed. What limitations will availability of natural resources play in the future development of the world in which presently 20% of the global population consumes 80% of the fuel and mineral wealth? Will today’s developing countries be forced to accept lesser standards of living than those now prevalent in the West?
6. Technological development has created unprecedented job growth during this century, yet fears persist regarding "the end of work": In 1640, King Charles I of England compelled the demolition of a newly erected mechanical sawmill because it endangered the jobs of so many people. One hundred years ago the mechanization of agriculture and rapid advancement of the industrial revolution in the USA generated widespread fear that the machine would replace human beings as the instrument of production, resulting in very high levels of chronic unemployment in society. Since then the USA has led the world in the adoption of increasingly sophisticated and automated technologies in all spheres of life, yet America has quadrupled its workforce from under 30 million people in 1890 to over 120 million employed workers today. The percentage of the American population employed is also at an all time high and expected to rise further in the coming decade. Although growth of employment in Europe out-paced progress in the USA from the early 1950s to the late 1980s, many Western Europe countries now suffer from high and still increasing levels of unemployment. Both the analysts and the general public share pessimistic visions of Europe’s future. What factors account for these differences in performance? What are the prospects for restoring job growth in Europe? What is the actual relationship between technological development and employment and what does it bode for the future?
7. Worldwide employment has increased dramatically in recent decades, but the world’s population has grown even faster: Since 1950 the world economy has created over one billion new jobs. During this same period, world population has tripled. In the 1980s, China created more than 100 million new jobs. A number of Asian countries including South Korea, Taiwan, Singapore, and Hong Kong have reached full employment and now suffer from severe labor shortages. In 1991, the International Commission on Peace and Food evolved a strategy to generate 100 million new jobs in India within a decade. Since then, growth of employment in India has more than doubled from 3 million to 7 million additional jobs a year. In order to achieve global full employment, another one billion jobs needs to be created in the coming decade. Can the potential for job creation match or outpace population growth in the coming decades? Does the world possess the capacity and resources needed to support such an enormous and rapid expansion of economic activity?
8. The transition strategies followed by most East European countries induced severe economic depressions from which these countries are only now beginning to recover: After the fall of the Berlin Wall, the breakup of the USSR and the end of COMECOM, the nations of Eastern Europe embarked on sweeping programs to transform their central-planned economies to free-market capitalism. Most of them adopted variations on a common set of policies advocated by market economists as a path to rapid economic growth. These policies included rapid deregulation of prices, privatization, introduction of convertible currencies and other policies designed to increase productivity and attract foreign investment. The actual performance of these countries during the first few years of transition was devastating. In the early 1990s, production in all 25 countries declined drastically, ranging from a minimum of 18 percent in Poland to 45 percent in Russia, 60 percent in Ukraine and 75 percent in Armenia. How is it that so few experts could foresee the disastrous results that would come? Was such a disastrous and painful transition inevitable? To what extent was it the result of inadequate knowledge of the development process among both these nations and their external advisers?
9. Large infusions of capital do not always result in development: Since the reunification of Germany seven years ago, West Germany has pumped more than $1.1 trillion of investment into the Eastern sector, an amount equal to the entire world’s all-time high military spending in 1987. Since then wage levels in the East have risen to the highest level in the world, while productivity remains at only 20 percent of the level in the West. Unemployment has grown from very low levels before reunification to higher than 25 percent, 30 percent when early and forced retirements are taken into account. What factors explain these disappointing results? What relevance does the East German experience have for other countries seeking accelerated growth? What is the true role of money in development?
10. Evidence regarding the relationship between democracy and development is compelling: The Protestant Reformation released enormous mental energy and social resourcefulness by freeing the individual from dependence on the arbitrary authority of the church. This opened the way for the birth of modern science, the spread of democracy and the Industrial Revolution in Europe. Democracy creates a fertile field for economic development by ensuring stability and peace within countries. The transition from monarchy to democratic forms of government made possible the rapid economic advancement of Western countries over the past three centuries. The limitations of authoritarianism are evidenced by the relatively poorer performance of East European nations under state communism after World War II leading to the wholesale adoption of democratic institutions by these countries since 1990. On the other hand, much of the progress of East Asian countries has occurred under conditions in which economic freedoms were introduced at the same time that political freedoms were severely restricted by a ruling elite. China continues to lead the world in growth rates by liberalizing its economy while maintaining an authoritarian form of government. In countries such as India, the fragmentation of political parties along communal lines, the pressure on politicians to grant unaffordable subsidies to win votes, and the spread of corruption are attributed by some to the granting of democratic freedoms to heterogeneous populations with relatively low levels of education. What is the relationship between political freedom and economic development? Under what circumstances and to what extent can development proceed in the absence of democratic institutions? Does the economic collapse of East European economies after democratization foreshadow a similar outcome in China?

These observations and the questions they call to mind illustrate that in spite of fifty years of concentrated effort and unprecedented achievements by the international community, fundamental issues pertaining to development remain at best poorly understood. The world has not yet been able to derive from its experience a comprehensive knowledge of the development process. Nor is it able to formulate effective policies with precision or predict with any degree of confidence future outcomes. Some nations have been much more successful than others in formulating effective development policies. If appropriate conclusions can be derived from these past experiences leading to the codification of valid principles or laws of development, then the widespread application of these principles may be applied to considerably accelerate the pace of development of all countries in the coming decades.

Questions and doubts about development reflect the fact that the world’s progress until now has been largely an unconscious or subconscious development. Looking back we observe the results of our past actions, but even now are unable to clearly explain the principles that account for these results, both the achievements and the failures. This recognition prompted the then Secretary General of the United Nations, Boutros Boutros-Ghali, to state in a message to the International Commission on Peace and Food that "reflecting on development is the most important intellectual challenge of the coming years." It also led the Commission to recommend in its report entitled Uncommon Opportunities: Agenda for Peace and Equitable Development an international effort to formulate a comprehensive, human-centered theory of development that will lead to more effective strategies to accelerate development.

The enunciation of theoretical principles or laws can be a powerful force for the identification, discovery and exploitation of untapped potentials. In the physical sciences, Einstein’s general theory of relativity played a role in advances in physics that led to the nuclear era, an understanding of elementary particles and the discovery of neutron stars, black holes, and gravitational waves. In biology, Mendel’s laws of inheritance, by postulating the existence of hereditary determinants now called genes, led to the discovery of DNA, the unraveling of the genetic code and tremendous advances in biotechnology. In education, Glenn Doman’s theory that intensive sensory stimulation during early childhood promotes growth of the brain and nervous system have given rise to revolutionary educational methods that dramatically increase the speed of learning and the development of human intelligence. At a time when laissez faire economic theory had failed dismally to revive economies during the Great Depression, John Maynard Keynes’ General Theory Of Employment, Interest And Money revealed that the problem of unemployment in severe depressions was one of inadequate aggregate demand which could not be solved by allowing prices and wages to fall to lower levels. This analysis paved the way for the Marshall Plan and public investment policies that helped industrial countries achieve full employment and high rates of growth in the years following World War II.

A comparison with the field of medical physiology makes clear just how far we are from possessing a comprehensive knowledge of social development and how much that knowledge would increase the effectiveness and results of our efforts to enhance the health and wealth of nations. Centuries of minutely detailed observation, analysis, research and experimentation have enabled medical science to discover the basic principles of human physiology and to go beyond the observable facts in many cases to uncover the fundamental laws of physics and chemistry that govern these processes. This knowledge has become so precise that it has become possible to formulate generally effective strategies for treating major disorders and improving health in people of all ages and physical conditions, including exact specifications regarding the formulation, timing, dosage and application of treatments. The general principles for health and hygiene are so well known that infant mortality rates have declined in many countries to less than a fifth of levels that pertained in earlier centuries and average life expectancy has increased by more than 50 percent worldwide during the past half century. Analysis of individual variation in physiological functioning has given rise to accurate and powerful statistical indicators for use as diagnostic tools. These indicators enable the physician to immediately understand the seriousness of a small increase in body temperature while recognizing wide variations in heart rate, blood pressure and the chemical composition of the blood may be attributed to differences in age, weight or activity.

When it comes to social development, we lack precision in virtually all the areas where medical science has acquired in-depth knowledge and effective power. The basic principles of development have not yet been enunciated. The impact of variations in the size, age, and environment of societies is poorly understood. There is little agreement on universal remedies even for such basic economic disorders as unemployment. Valid statistical indicators have yet to be evolved that accurately reflect the fundamental economic health of society, and that can be used to diagnose disorders and formulate effective policies. Indeed, the science of development is so young that many would refute even the existence of universal principles governing the process or the possibility of formulating strategies for accelerating the process applicable to societies at different levels and stages of development.

Because the world lacks a clear vision of the development process and potentials, it achieves much less and much more slowly than would otherwise be possible. Experience from other fields demonstrates that a conscious knowledge can increase speed and efficiency of any activity by a factor of 10 or 100 times. 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. If the world has developed this far by an unconscious process without the benefit of a comprehensive knowledge, then the formulation and application of this knowledge could increase the pace and raise the level of development by tenfold or more.

Humanity has come very far from its modest origins and has already created what must appear from that perspective as a nearly infinite plentitude. Additional observations about contemporary conditions strongly suggest that the rate of development can be accelerated far beyond the levels achieved in the past and that the potentials for development of human society are at the very least several magnitudes greater than its present accomplishments.

1. The end of the Cold War opens up greater opportunities for the global prosperity: War destroys what society has accomplished. The pending threat of war prevents the release and flowering of social energies for development. Peace is an essential precondition for development. A secure and abiding peace is a fertile field for the flowering of human potentials.
2. The spread of democracy is conducive for accelerated development: The spread of the democratic revolution to Latin America, Eastern Europe and Africa since 1980 has generated conditions conducive to much higher rates of growth in those regions.
3. Technological development far outpaces social accomplishments in even the most advanced societies. Adoption and full utilization of already proven technologies can dramatically elevate performance in every field: The average yield of tomatoes in India is 8 tons per acre compared to an average of 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.
4. 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, movement of 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 that was inconceivable just a few years ago.
5. Further technological advancements now in process are expanding the world’s supply of usable energy while reducing per unit consumption rates for material resources: The discovery of infinite energy within the atom illustrates the enormous untapped potential concealed within apparently small things. Recent strides in reducing the cost of solar energy indicate that the commercialization of this unlimited energy source is fast approaching. A tiny hand-held device now accomplishes work once done by a room full of supercomputers. The transistor has recently been reduced to the size of a single electron. Copper wire is now being replaced in the telecommunications industry by fibre optic cable made from glass and by wireless satellite communications that do not require any cable at all. The physical medium is shrinking to the vanishing point.
6. The mismatch between the skills required by rapidly advancing economies and the qualifications of the workforce is a major impediment to growth of employment, but one that can be removed: The most severe constraints to global economic growth are not shortage of jobs but rather shortage of qualified people to fill all the available positions. Presently the world is creating 500,000 new jobs every year for software professionals, but there is a severe shortage of trained people to take the jobs and the gap is widening. In the USA alone there are currently 190,000 unfilled positions for software professionals. The same is true for a range of skilled positions in most countries. In India the shortage is acute for basic vocational skills such as carpenters, electricians and masons. These unfilled positions are employment opportunities for individuals who qualify themselves with the necessary skills. For countries, they represent untapped potentials arising from the mismatch between the skills of the global workforce and the changing requirements of society.
7. The speed of technology diffusion is accelerating: The Xerox machine was introduced into India in the late 1970s, more than 15 years after its use became widespread in the USA. Two years ago, Windows 95 was launched in New Delhi just weeks after its release in the USA. This year Intel announced its latest microprocessor simultaneously in USA, India and Beijing.
8. Small innovations in social systems can expand opportunities in every field: A recent change in Dutch law regarding home mortgages has doubled the borrowing capacity of home owners by allowing them to pay off half of a 30 year mortgage in 30 years and then refinance the rest, rather than pay it all. This has enabled people to purchase larger homes and stimulated the housing industry. A simple change of law has reduced the unemployment rate in Netherlands by nearly half by giving full employment rights to workers who prefer to work only part-time. The Chicago school district, which until recently ranked among the poorest performing in the country, improved its performance substantially within a few years by introducing mandatory testing requirements for all students seeking promotion from lower to higher levels of the secondary school system.
9. Conditions are ripe for unprecedented progress: 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 accessible and so are trained people to operate it. Information, that most powerful catalyst of human initiative, is more available 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.
10. 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. Policies that strive to stimulate higher rates of growth in all countries will have maximum self-generating capacity.

Based on these observations, we may even seriously entertain the question of what if anything limits humanity from eventually achieving whatever it ardently aspires to accomplish. The ultimate contribution of a comprehensive theory would be to reveal and validate these potentials and indicate how they can be harnessed.

The theory must be able to explain the process by which these potentials are created and their role in development. At the same time it must be able to account for the fact that in most instances the actual exploitation of opportunities falls far short of their 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 are also 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 notable 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 Eastern 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 economist to foresee imminent doom where in fact there was enormous opportunity. In 1950 Holland’s population exceeded 5 million, reaching a density which many believed approached the ultimate limits that this tiny land mass 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. An expert team sent to India by the Food and Agricultural Organization in 1963 estimated that India’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 100 percent within a decade. Had India’s leaders shared the view of the experts, the Green Revolution may never have been attempted. The limitations in our vision of future possibilities arise because we insist on basing projections of future performance on the basis of historical trends, even when changing circumstances have radically altered the environment. The development of the high yielding varieties of wheat and rice was a development which dramatically altered the equation for food production, yet was not factored into the assessment of what could be achieved. Looking forward, we see apparently insurmountable obstacles to our future progress. Looking backwards, we see continuity and progress. History has shown time and again that there are no dead ends, only minds that are unable to see beyond the immediate obstacles to opportunities and solutions.

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 they found it, 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 alien desires and discouraged trade. The Chinese developed a traditional immunity to the 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 suddenly ban all marine ventures. Fully equipped with technology, intelligence and national resources to become great discoverers, the Chinese attitude doomed them to become the discovered.

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. 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. This attitude of distrust of optical devices was a great obstacle to the development of the science of optics.

In 1492, the Spanish inquisitor-General Torquemada gave Jews three months to convert to Christianity or leave the country. The brilliant Abraham Zacuto left the country and was welcomed by the king of Portugal. He, along with his disciple John Vizinho developed the technique for calculating latitude, which helped Portugal in her marine ventures. Portugal gained what Spain lost due to her intolerant attitude. Similarly in the 16th century, clockmakers fled to Geneva and London from France and Germany due to the persecution of the Catholics. In the 20th century, Nazi and Fascist persecution of the Jews in Europe made the U.S.A. a world center for development of atomic physics.

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 during the 18^th Century 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 they provided by opening markets for their 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 book learning was totally irrelevant to their lives. An identical belief was common among the Indian masses in the 1950s and still persists among some groups in every country.

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 labor unions in the USA 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’etre than the momentum of past habits that refuse to die. High rates of child birth 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 very 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 monopoly against foreigners. The French guilds excluded new talent, inhibited movement into new lines of work, and enforced countless narrow monopolies. They imposed exorbitant dues on their members, restricting the number of apprentices. Life in England, with looser guild restrictions was more favourable to the clock makers' crafts. As a result of better organisation, when seafaring clocks and better scientific instruments of all sorts were required by the expanding seafaring empires, English clock makers were pioneers.

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 India the traditional habit of saving and paying dowry in the form of gold jewelry continued unabated even after more secure and financially attractive forms of savings became widely available. The people of India possess nearly 29,000 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 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 habit remains.

It is possible to site 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 who 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.

1. Early nomadic peoples exhausted the food and fuel resources in each locale they visited and then moved on to other localities. So long as society followed this practice, sedentary civilizations, urban centers and industry could not develop. The development of agriculture represented a major conceptual and practical breakthrough that opened up unlimited opportunities for economic and social progress.
2. Prior to the Great Crash in 1929, investment in the US stock markets was a high-risk activity, where speculators and Wall Street insiders often prospered at the expense of the average investor. Rather than accept this highly disruptive pattern of economic behavior that was sanctioned by principles of laissez faire economic policy as natural and inevitable, the US Government introduced legislation to regulate financial markets and protect investors from misrepresentations and illegal transactions. Subsequent experience has shown that free markets can be both strengthened and stabilized by appropriate intervention. Regulation has prevented the recurrence of a Great Depression and the continuous growth of American financial markets for the past 60 years.
3. After the First World War, the allies claimed huge financial charges against Germany as punishment for their aggression. These payments severely retarded economic recovery, generated widespread social discontent and paved the way for the rise of Hitler, leading to World War II. After the Second World War, for perhaps the first time in history, the victors decided to actively aid the rapid recovery of their erstwhile enemy. Despite very strong animosity against the defeated power, Germany was permitted to share the resources distributed under the Marshall Plan. The allies extracted knowledge from their earlier experience, overcame strongly resistant social attitudes and reversed an age-old practice of despoiling the defeated power. The new alliance cemented by this change in attitude has preserved peace in Europe for more than half a century.
4. Oil consumption increased enormously during the second half of the 20^th Century due to the rapid spread of industrialization and rising living standards. The fourfold increase in international petroleum prices in 1973-74 made evident to the public everywhere the truth of what the environmentalists had been saying for years – that the earth’s non-renewable natural resources were limited and destined to disappear sooner or later, with profound impact on the global economy. The onset of the Oil Crisis sparked pessimistic projections and dire predictions of impending calamity based on the assumption that past performance would continue unabated until oil resources had been exhausted. In fact, the crisis has spurred significant changes in human behavior. By the end of the 1970s, intensified exploration led to the discovery of new oil fields in Mexico, Alaska, and the North Sea. At the same time, the widespread adoption of energy conservation measures resulted in a decline in the demand for oil for the first time since the Depression of the 1930s. Oil, which had been the fuel of choice for half a century, declined from 46 percent of total world energy use in 1979 to 39 percent in 1985. Increased energy efficiency is now being applied in all fields of technology. Refrigerators, which until recently consumed 25 percent of the total domestic power used by American household, now consume 75 percent less energy than those produced prior to the oil crisis. Vehicles operated on alternative fuels are gradually being introduced. Meanwhile, energy generation from wind grew 150 percent from 1990 to 1995 and is still increasing at a 25 percent annual rate. Shipments of solar cells for power generation have grown 12-fold since 1980 as the price per megawatt continues to fall. Similar progress has been made by many countries in reducing air and water pollution.

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.

Development is often described in terms of economic and social outcomes or government programs and policies. The debate is currently underway as to whether the goal of development policies should be high rates of economic growth, environmental sustainability, people’s participation or rapid improvement in literacy, nutrition, infant mortality and life expectancy among the poor. These descriptions explain only what development should achieve and how it should achieve it. They do not explain what the phenomenon of development actually is, knowledge that is essential for understanding how any specific set of outcomes has been achieved in the past and for formulating effective strategies to achieve better outcomes in future.

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, accelerating very rapidly during 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, enjoyment and accomplishment.

Political, social, economic and technological development are various expressions or dimensions of the development of the human collective. For the purposes of formulating this theory of development, we confine the subject to the field of economic development and consider other fields only at the points where they most directly interact with economic advancement. However, through this presentation 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, including the motive force that drives social change, the essential preconditions for that change to occur, the barriers that obstruct the process, a variety of resources, including capital and technology, along with several types and levels of infrastructure. All 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 is not fully appreciated because it is largely non-material in nature. That characteristic is organization. The process of development occurs by the creation of higher levels of organization in the society capable of accomplishing greater acts with more efficient use of social energies. The essential nature of this 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.

It is currently fashionable to place emphasis on human development as something distinct and different from economic growth. In establishing priorities and strategies, this distinction may 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. But once again, this debate really focuses on results, priorities and strategies for development, not on the process itself.

A comprehensive theory must also be human centered, but not just in the sense of insisting that human beings are the rightful beneficiaries of social progress. It must also view human beings as the source and primary driving 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 the driving force for development. The awareness and comprehension of people 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 higher and 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 observe that the same principles 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 drives an airplane or steers a ship capable of carrying huge payloads. What an individual could produce in a lifetime, now is produced in a month, or a week or a day. This process of increasing productivity is still going on and theory suggests it can continue without limit. As we presently utilize only a tiny fraction of the sunlight that shines upon the earth, each person presently utilizes only a tiny portion of their individual potentials and social opportunities. Societies also utilize only a tiny portion of their potentials. The real limitations to human development are not physical. They are limitations in our knowledge, vision, attitudes and aspiration for higher accomplishment. A valid theory must be able to explain the central role of these intangible factors in human development.

A theory of development must certainly examine the issue of results and consider the impact of various outcomes on the overall health of society. However, this consideration can only be meaningful after the process of change itself is well understood and only in the measure that the discussion of process and results are kept distinct and separate. Too often, ethical considerations of fairness and concern with negative consequences of development prevent objective discussion. Although the process of development is invariably accomplished by people, the benefits of development do not necessarily go to every member of society in equal measure. As the pace of development increases, there is growing concern generated by the negative results of what we commonly term development, including environmental degradation and pollution, crime and corruption, growing disparities between rich and poor, drugs and social isolation. The theory should be able to explain why these negative consequences occur and determine whether they are inevitable results or avoidable side effects. It should also point the way to strategies and policy measures that can eliminate or minimize their occurrence. It is legitimate for society to ask and debate what type of development results are most desirable and beneficial and what type of policies are best suited for achieving these results. But discussion of these issues is best reserved until the process itself has been fully explored.

The significance of this definition may become clearer when we contrast development with 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. Most nomadic, tribal and subsistence level agrarian societies fall into this category. All the available energies of the society are fully absorbed in protecting the society from deprivation or external threats and maintaining the status quo. Traditional beliefs and attitudes are perpetuated without thought or question. There is little innovation.

Social change may be arrested at the level of survival by the presence of a strong internal authority that seeks to maintain the status quo, such as a feudal political system or an ultra-conservative religious tendency. A society can also be reduced to survival status by the active intrusion of a powerful external authority that suppresses change, such as foreign conquest and colonial rule. The threat of external aggression or the actual presence of physical strife between or within societies also tends to stifle the impulse for change that is the essence of development. Prior to 1950, the economic imperialism of European powers acted as a powerful deterrent to development in countries subject to colonial rule such as India and its neighbors. War, social strife and domination by dictatorial military leaders and authoritarian political parties obstructed progress in many countries for decades even after they achieved independence, especially in Africa.

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. Prosperous delta regions such as Tanjore District in India have increased their prosperity by more fully utilizing the region’s rich soil and water resources to increase agricultural production, without any fundamental change in the way life is organized. 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. After Okinawa was returned to Japan by the USA in 1972, the heavy dependence of the island economy on the US military bases has been replaced by dependence on transfer payments and investments in infrastructure by Tokyo resulting in higher incomes and improved living standards, but the basic organization of economic activities remains the same.

The phenomenal success of the Marshall Plan in promoting rapid economic recovery and growth in Europe after the Second World War may have been partly responsible for the recent failure of development strategy in East Germany by blurring 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 an example 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 introduce new political, administrative and economic systems in the eastern half of the country. 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. In fact, it may inadvertently have aggravated the task of development by raising high expectations among the population in East Germany that their living standards would be uplifted 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.

Development is distinguished from survival and growth by the introduction 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, 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.

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 not mutually exclusive. Very often they are 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 development connotes the qualitative vertical movement to a higher level of performance and growth connotes the quantitative horizontal expansion of activities at whatever level the society has reached in a particular field. The emergence of a more sophisticated level of commercial organizations such as the establishment of fast food franchises in the USA in the 1950s or the introduction of leasing companies in India in the mid-1970s are developmental accomplishments in these specific fields. The subsequent spread of fast food franchises throughout the USA represents a horizontal growth of the fast food industry. The extension of franchising from fast food to photo processing, insurance, real estate and hundreds of other fields of business represents further development of these other fields, contributing to the overall economic development and growth of American business.

The remainder of this discussion will focus 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.

In examining the importance of theory as a revealer of potentials, we drew a distinction between subconscious and conscious social activities, using these terms in a slightly different manner than they are normally used to describe the behavior of individuals. We apply the term subconscious 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, or the stages and principles governing the process of accomplishment. Subconscious development is the normal process of trial and error experimentation and experience by which society has advanced up to the present day. Society accumulates the experience obtained by the initiative of countless individuals and gradually formulates from it a conscious understanding of the secrets of success in that field. In other words, human development proceeds from experience to comprehension. Experience comes first and full comprehension usually comes long afterwards.

Individuals sometimes do acquire a conscious knowledge of what they do, but that does not mean that the social collective possesses and is guided in its actions by that knowledge. Rather, we believe that the latter is almost never the case. Societies progress through the combined effort 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.

This principle is most dramatically illustrated by the development of the United States over the past two hundred years. Its achievements are certainly not the result of any preconceived plan of its leadership nor of a collective vision and aspiration of the society-at-large. The society itself consisted throughout this period of myriad sub-national groups drawn to America to escape religious persecution, political oppression or economic hardship in search of a better life for themselves and their families, not in pursuit of any common goals for the country itself. Yet by some means, the collective has utilized the sum of these individual efforts for the elevation of the society as a whole.

The distinction between subconscious and conscious development is not meant to imply that societies do not make collective efforts to further their own progress. The leadership of society can and does take collective initiative on behalf of its members. It only means that in almost all instances these efforts are carried out by the society without comprehensive knowledge of the development process they seek to bring about. 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, while 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.

By planned development we mean the initiative of governments and social leaders to accelerate or direct the progress of the society through the formulation and implementation of policies, strategies and programs. Such efforts are as old as society itself, but they have grown tremendously in scope and magnitude during this century. Early efforts focused on activities such as the development of roads, ports, water tanks, promotion of commerce, industry and education. Elementary education, for example, was made universal and compulsory by the Dutch Republic as far back as 1618 and by Scotland in 1696. Most Western nations accepted the principle of universal education during the 19^th Century. But since World War II, the goal of universal education has been accepted throughout the world. After 1950, governments of every country have assumed far greater responsibility for guiding and directing development in a wide range of fields.

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 development, individuals, groups of individuals and organizations are the initiators. But apart from this, is there really a fundamental distinction between the two types of development? Our conclusion is that there is not. The principles governing the process of development 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 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 and prior to the 200 year period of British colonial rule which 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 would generate significantly higher yields, to ensure that the higher yields would be readily purchased without 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. It 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 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 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. The reason that so many planned development efforts fail is that they are initiated with little or no understanding of this fact and little consideration for the steps that must be taken to mimic the natural social process. It is true that especially 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. At the time these initiatives were taken 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.

A close observation of development raises some perplexing questions regarding the factors that govern the onset and speed of development. By the early 1960s, the technology for the photocopy machine reached a certain level of maturity and retail service outlets had become common in many Western cities. Yet, a visitor to New Delhi in 1975 would not have found a single retail outlet in the city providing photocopy services. Returning to the city three years later, he would have been surprised to discover photocopy shops located throughout the city, including more than a dozen on a single block in the main shopping district. By 1980, our visitor would have found photocopy shops in all major cities and towns as well as many smaller, rural towns. Many Indian students and business people traveling to the West had been exposed to the use of photocopy services and many Indian companies had already acquired photocopy machines years before. Why, then, was there such a long delay in their appearance followed by such a rapid proliferation throughout the society? We might assume from economic principles that there was no demand for the service or that its cost was too high. But there is no evidence of any significant change either in the Indian economy or the economics of photocopy technology that would explain why the rapid proliferation of the business occurred when it did and not a few years earlier.

Our own observation is that the apparently inexplicable circumstances accompanying the introduction of photocopy services in India are typical of the way societies develop, regardless of whether that development is by spontaneous initiative of the population or planned endeavor of government. The attempt by the Indian Government to promote high school education in the early 1950s met with an indifferent response from the society, but two decades later education of all types and at all levels was being passionately sought after by the public. What transpired during these 20 years that can account for the difference in response? In a similar manner, the Indian population failed to respond to the Government’s earlier efforts to promote entrepreneurship, self-employment and industrialization, but has more recently embraced these activities with enthusiasm.

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. Development occurs when the accumulated surplus energy of society gives rise to the initiative of pioneers who introduce new, more productive types and levels of activity. 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. The first of these 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 high 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 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. Historian Arnold Toynbee observed that 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.

Surpluses are a measure of accomplishment and mastery at the previous level of development. In an effort to explain why the Industrial Revolution began in England rather than in other countries that had access to the same technology, the Nobel laureate Arthur Lewis noted the central role played by the growing prosperity of English farmers resulting from the commercialization of English agriculture in the previous century. English farmers introduced improved methods of cultivation and animal breeding, better implements and new crops. More efficient and productive agriculture generated greater purchasing power, higher demand for manufactured goods and surplus labor that could migrate from the farms to work in urban industries. Successful completion of an agricultural revolution became a foundation and launching pad for industrialization.

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 to even 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 most abundantly in societies that have achieved the highest 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 referred to earlier under which it is unable to accumulate or express itself – war and dictatorship. Societies situated in the midst of recurring regional conflicts or experiencing high levels of internal violence resulting from a breakdown of the social order find it extremely difficult to respond to opportunities, because all the energies of the society are directed for self-defense and survival. 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 actually spur development efforts up to a point, using the threat or pressure of coercion to direct 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 made an important contribution to the onset of the mercantile era and the founding of the great European commercial empires. It freed the energy and power of society from domination by a land-based ruling class seeking to preserve its political and social power by restricting the rise of trade and banking. The rise of Parliamentary institutions with real legislative power enabled European societies to arrive at a working compromise and reconciliation between the interests of monarchy, aristocracy, church and commercial classes. The peace and social order thus arrived at left the Europeans free to direct their prodigious energy and power into commercial expansion overseas. 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 for development, 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 are read by an estimated 1.5 billion people. Understanding the power of awareness as a precondition for rapid development, one of Gorbachev’s most important initiatives as Soviet President was to implement a policy of glasnost, openness, to generate greater public awareness within the country of the developmental achievements of the Western world. That awareness became a seed and driving force for the chain of events that followed.

Energy provides the fuel and awareness helps 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 it to the effort required 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 its 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 and reported similar occurrences in recent years. 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.

The belief that one’s own way of life is somehow more satisfying, civilized or culturally superior to what others have achieved is one reason why awareness of the developmental achievements of others does not always spur imitation. We cited earlier the historical Chinese resistance to foreign ideas and ways of life, which prevented them from seeking to imitate or compete with other societies based on a sense of their own cultural superiority. Similar sentiments can be found today. The respect for physical work in the West is resisted by many educated people in developing countries who frown on manual labor. The widespread adoption and use of computers by senior American business executives and professionals is resisted by many of their counterparts in Western Europe, who consider it appropriate work for technicians. Castes, classes and communities within countries respond in the same way to achievements and new ways of life adopted by those whom they view as socially or culturally inferior. Thus, the aristocracy of France refused to engage in commerce as an activity beneath their station. Successful French businessmen made haste to purchase royal patents of nobility and withdraw from commercial activity. Their counterparts in England invested in commercial ventures resulting in a fusion of the landed nobility and merchant class, facilitating the remarkable economic growth of Britain in the 17^th and 18^th Centuries. The educated classes in some countries respond in similar fashion to opportunities that are viewed as beneath their social station, even when the financial rewards are substantial.

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.

Greater wealth, comfort, and material security appear to be primary motives for development, but the drive to maintain or elevate social position and prestige is usually a more powerful motivating force. This truth is expressed positively by the American aspiration to keep up with the Joneses and negatively in the Russian folk tale about the peasant who was willing to sacrifice half of his wealth on the understanding that by doing so his neighbor would lose all that he possessed. Individual perceptions of their social status relative to those with whom they identify as peers are a strong determinant of motivation. The same is true of societies. Economic gains have not been the only spur to competition between the USA and Japan since 1980. American business perceived a severe threat to its pre-eminent status as world economic leader. Neighboring countries such as India and Pakistan eye each other’s achievements and judge their progress in relative terms. The introduction of a major economic initiative by one often spurs parallel efforts, where similar initiatives by other countries may not.

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 the case. 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.

Although governments often provide conscious leadership for development, the direction itself is determined by the subconscious will of the collective. Effective leaders are those that are in touch with and give conscious expression to that collective will and help guide the society to achieve what it aspires for. 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 developmental 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.

The efficacy of governmental development programs depends on the ability of the political and administrative leadership to identify areas in which the society is prepared to act. In retrospect it is evident that after two hundred years of colonial rule during which entrepreneurship was vigorously suppressed by the British, the Indian people were not prepared to immediately embark upon a massive program of industrialization in the early 1950s. Business lacked the capital and management expertise, the work force lacked the skills, the physical infrastructure was primitive, and few people had any experience in industrial enterprise. It is also not surprising that many of the high schools established in India during the 1950s were quickly closed or converted into primary schools due to the lack of response from the public. At the time, large illiterate sections of the population had not yet come to realize the importance of education or to feel a pressing urge to educate their children. In contrast Indian farmers were able to express their enterprise and skill relatively unhindered during the British Raj, so it is not surprising that when the requisite organization was introduced by government during the Green Revolution, the farm community responded readily to the opportunity.

Surplus energy, awareness of opportunity and aspiration are three pre-conditions for initiating the process of development in any field of activity. When all three factors are present in requisite measure, the society is subconsciously prepared for change. But the society 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, they are not necessarily pioneers of social development. The developmental 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 pioneering individuals. 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. During the second half of the 19^th Century, farming in the USA became more mechanized, productive and prosperous, yet farmers still depended on travelling sales people and ill-provisioned general stores to meet their growing appetite for modern conveniences and luxuries. Montgomery Ward established the first mail order catalog business in the USA in 1872, primarily targeted to reach the 60% of American consumers who lived in rural areas, often at great distance from the urban centers where retail merchandising was almost exclusively concentrated. Inspired by this example, 14 years later, a railway station manager named Richard Sears founded another USA mail order company to target the rural market. It took time for the skeptical rural population to gain confidence in this new way of doing business, but once they did, mail order sales multiplied rapidly and the new activity became a part of the American way of life. By 1920 Sears Roebuck had become the largest retail business in the entire world with sales of $235 million. One hundred years after the founding of Sears catalog, total consumer mail order sales in the USA exceed $120 billion annually.

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 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 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 unware of and then to translate 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 an entire new industry, the overnight parcel delivery business. The meteoric success of the two young technophiles who started Apple Computer Company in their garage with $5000 became a model for a whole new generation of entrepreneurs and the development of Silicon Valley as a center for high tech businesses. 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 the 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. Brilliant Indian students who qualified for high level government jobs but chose instead to join the private sector in the 1960s and talented engineers who declined salaried jobs in order to start industries in the 1970s were rare exceptions whom very few cared to imitate. They were too far ahead of their time. 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 by the owner of a typing service was an initiative whose time was right. Competing typing companies in the city quickly imitated the pioneer and from there the new business multiplied like wildfire around the country. The adventurous farmer who dug the first successful borewell in a poor, backward South Indian village was at first 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. Knowing how to create the appropriate conditions for unleashing the multiplier effect is essential for formulating effective 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. The British, Dutch and French each founded an East India Company during the first decade of the 17^th Century to organize trade with Asia and gave these companies unprecedented powers and privileges to promote national interests. The establishment of the London Clearing House in 1770 greatly facilitated payment of bank checks in England. Informal gatherings of stockbrokers at London coffee houses became the forerunner establishment of the London Stock Exchange in 1773.

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.

If the society is not yet prepared to accept a higher level of organization, it responds with skepticism or distrust, refuses to avail of the new facilities, misuses them so as to render them useless or condemns them as detrimental. Many rural American farmers initially rejected in disbelief the offer of a money back guarantee in Sears’ 1900 mail order catalog and preferred to keep purchasing from local merchants with limited selections and higher prices. US consumers are now empowered by law with the right to return and receive full refund for any products purchased by mail using a credit card, thereby encouraging very rapid expansion of mail order commerce in the country. Today many American consumers still feel uncomfortable making purchases by credit card over the Internet.

Development of any society takes place and builds on an elaborate foundation of social organizations that are largely taken for granted by the society, but without which it cannot function effectively. 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 a very wide range of supporting structures and practices needed for a market system to operate effectively. Banks already existed, but they were accustomed to lending only to large government-owned enterprises. They had neither the policy guidelines nor the expertise nor sufficient staff in place to extend lending to a rapidly expanding private sector. These countries lacked stock and commodity exchanges, property rights and mortgage laws, standardized accounting practices and private accounting firms, commercial insurance, producer and consumer cooperatives, marketing boards, export promotion agencies, leasing and venture capital companies, mutual funds, credit and collection agencies, real estate agents, trade unions, industrial associations, industrial estates, exclusive export processing zones, systems for just-in-time inventory management, and countless others.

The need for new institutions in Eastern Europe is apparent in all fields of commercial activity. It is particularly acute in agriculture. Hoarding, speculation by traders, regional shortages and price variations have been aggravated by the absence of alternative systems for distribution to replace the old centralized food procurement system. Privately operated commodity exchanges have sprung up to handle wholesale transactions. But, unfamiliarity with such institutions, and the lack of a firm legal basis for enforcement of contracts and a system for grading and inspection to guarantee the quality of produce traded, have impeded their functioning. Even simple commercial systems needed to be created to support commerce and industry as well--such basic systems as telephone listings of sources of products and services that are found in every telephone directory in the West. The market reforms were expected to lead to a rapid proliferation of new small enterprises, but most of those created so far are engaged only in trading and retail sales. Small business development centers, business incubators, industrial estates, and venture capital funds are needed to encourage entrepreneurship.

In recent decades 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. Since the first commercial UNIVAC computer was launched in the USA in 1951, the computer industry has developed rapidly and continuously until it now comprises thousands of companies, employing millions of people and generating tens of billions of dollars in sales every year. The explosive growth of this industry would not have been possible without the organization of educational programs to equip people with the skills needed for manufacturing hardware, producing software, repair, maintenance, and use of computers in virtually every field of modern life. Currently, the US produces 50,000 fresh computer science graduates annually, yet the demand continues to grow so rapidly that there are at present 190,000 unfilled positions in the country for software developers alone.

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 in which 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 custom, beliefs and the weight of social tradition and 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 can give rise to institutions at a later stage. Democracy was originally established and enforced by constitutions and legal safeguards but in older democracies it has matured into an institution integrated into the beliefs and values of the people. Organizational initiatives to promote development in one phase mature into social institutions over time. Government agencies established to promote industrialization or exports play a decreasingly significant role when the spirit of entrepreneurship becomes institutionalized in society. Education matures into an institution when the population fully understands the importance of knowledge for personal growth and fulfillment and seeks to continuously expand its knowledge even after passing out of the formal educational system. Education, which became an institution in many Western countries at least a century ago, is still in the organization phase in many developing countries where schools are over-crowded and under-staffed and large numbers of illiterate adults have not yet fully understood or accepted the essential role of education in their lives.

This transition from organization to institution may be more or less rapid. Sear’s original money back guarantee was a novel innovation that for decades distinguished the company from competitors. By the 1960s, the public had come to expect and demand this level of assurance from merchants, forcing major retailers to adopt the Sears’ policy. Since then this expectation has become so pervasive that American retailers have universally embraced it and it has become a normal aspect of commerce in the country.

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. Since the introduction of the credit card in the 1950s, consumer credit in the USA has grown exponentially. Credit card purchasing, like investment in the stock market, has become institutionalized as part of the American way of life. The fast food business began in the USA back in 1921 when White Castle opened its first of 175 hamburger stands which it established over a period of four decades. In 1955 two other companies, McDonalds and Kentucky Fried Chicken, entered the fast food business after 1955. The real growth of this industry began when these new companies adopted a new method of organization, franchising. Franchising enabled them to expand rapidly by attracting entrepreneurial investors to establish and operate new facilities under the company name. Under the new system more than 10,000 new fast food outlets doing more than $10 billion a year in business appeared over the next 30 years. Franchising subsequently became the basis for the growth of many other businesses such as dry cleaning, photo film developing, real estate, brokerage, insurance, health clubs, home remodeling and home security, printing, office and home cleaning services, etc. Today both fast food and franchising have become institutions in America.

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. In the past, sons became soldiers, craftsman, sailors, farmers or merchants because that was what they learned from the family. Today there is far greater upward mobility from one generation to the next and other supports for individual development outside the family, but the influence of family is still pronounced. 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. Offspring of entrepreneurs learn from their parents about taking risks, handling money, exercising authority, and organizing work. These capacities are especially evident in children from communities that have specialized in business over many generations, such as the Nattu Kottai Chettiars of South India, who actively prepare their children from a very young age. 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.

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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.

It may not be immediately apparent why the central role should not be accorded to capital or to technology instead. Without availability of capital to finance costly, high risk naval expeditions, the Age of Mercantilism could never have begun. Without advances in mechanized technology to increase productivity, the Industrial Revolution would never have gotten underway. The theory does not attempt to depreciate the role of either capital or technology in development, but rather to place their contributions in proper perspective.

Why then does the theory give center-place to so nebulous and intangible a concept as organization? The answer lies in understanding the essential nature of both organization and development. Development, we have said, is the upward directional movement of society from lesser to greater levels of energy, efficiency, quality, productivity, complexity, comprehension, creativity, enjoyment and accomplishment. These attributes are both the means for achieving development as well as its most characteristic expressions or results. The factor which they all have in common and which imparts to them their value is organization. Higher levels of each of these attributes is the resultant expression of higher levels of organization in society. Organization is the capacity to mobilize all the available information, knowledge, material resources, technology, infrastructure, and human abilities to meet challenges and take advantage of opportunities. Development is the process of continuously enhancing the capacity of society to respond to opportunities and challenges by increasing its level of organization.

Certainly money plays a crucial role in development, but money is itself the product of organization. In earlier societies, land was the principal form of wealth. The productivity of the land was the primary resource for development and that productivity depended on the organization of society for agricultural production. The growth of commerce depended on creation of more liquid forms of wealth that could be moved and traded for precious goods. Money replaced land as the principal form of wealth. But money by itself has no inherent value and cannot produce or develop anything. Money depends for its productive power on organization. The creation and operation of a money economy depended from the beginning upon the establishment of governmental organizations that could issue new forms of money, financial organizations that would honor, store and transfer it, and commercial organizations that would accept it in exchange for goods and services.

Money not only depends on organization; it is an organization in itself. Money is a commodity, such as gold, or an officially issued coin or paper note that is legally established as an exchangeable equivalent of all other commodities, such as goods and services, and is used as a measure of their comparative values on the market. It is an abstract unit of account in terms of which the value of goods, services, and obligations can be measured. The systems of exchange, valuation, issuance and conversion of one form of money into another constitute elements of that organization. The value of money depends directly on the level of this organization. The more developed it becomes, the greater the productive power of money.

Over the last 150 years, there has been a further shift in the relative importance of different factors in development. Technology has gradually replaced capital as the most productive resource and source of new wealth. The invention of non-human forms of energy and machines that can be operated by that energy has played a vital role in social development. But technology is only an input for production. By itself it produces nothing. The ability to organize production so as to utilize a combination of human beings, materials, energy and mechanical devices is the critical factor. Organization makes technology productive. The production of higher levels of technology depends on an increasing capacity to organize research, experimentation, production of quality materials and parts, the education and training of a skilled work force. The history of technological development is not the result of thousands of isolated and independent discoveries. It is the result of a systematic effort to build upon past discoveries through incremental innovations and major creative advances. This effort was initially carried out primarily by isolated individuals but it gained significant momentum only after it became a collective and cooperative endeavor of academic and scientific agencies to record, document, evaluate, publicize, recognize, reward, protect, preserve and perpetuate successive improvements in technology by raising the organization of inventive activities in society. Like money, technology not only depends on organization; it is itself an organization – the organization of humanity’s cumulative scientific knowledge and technical know-how applied to perform specific functions.

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 had 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. Organization is a collection of systems coordinated in space and time to achieve a given result. 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. This arrangement creates far greater exposure for a seller’s products that the individual alone could generate and provides the buyer with easy access to a broad selection of products. The market enables both to complete more transactions 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 modern department store increases the effectiveness of the market by gathering together in one location a wide range and assortment of different products from different parts of the world. The mail order catalog abridges distance and elevates efficiency by eliminating the need for buyer and seller to meet personally. Internet commerce abridges both space and time, by enabling buyer and seller to interact instantaneously 24 hours a day around the world. The more the society raises the organization of its activities, the more productive and developed the society becomes.

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 performance. Take education, for example. 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 for teachers, instruction and evaluation of students. Over the past few centuries the