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Transforming Traditional Agriculture
This paper critically examines the economic logic underlying Professor Schultz's concept of Traditional Agriculture and his policy recommendations for transforming the same into a modern efficient agriculture (Theodore W Schultz, "Transforming Traditional Agriculture", Yale University Press, 1964.) and points out a certain element of the situation which it seems have escaped his attention.
The paper is thus divided into two parts. In the first, I shall raise certain questions of economic analysis. In the second, I shall indicate certain relevant Issues which I think Professor Schultz has missed.
The economicanalytical apparatus set up by Professor Schultz seeks, in the first instance, to explain the production behaviour of farmers who are bound by traditional agriculture. His point of departure from conventional explanations is to reject, cultural and institutional differences as necessary explanations. Consequently, he bases his economic concept of raditional agriculture on the fact that an economy characterized by traditional agriculture does not grow or is stagnant. This means that in such an economy, the stock of reprodudble means of production does not grov or remains unchanged. Because this a condition to which traditional agriculture arrives gradually over a long period and.presumably stays there indefinitely, Professor Schultz refers to it as a condition of long term equilibrium. Analytically speaking, such a condition is reached and maintained provided the conditions of supply of and the demand for reproducible means of production in an economy remain constant over a sufficiently long period. That the conditions of supply remain constant is expressed by means of his first 'critical condition namely that "the state of arts remains constant". where in by the state of arts is meant "the state of arts underlying the supply of reproducible factors of production". (p 30). The requirement that the' conditionsof demand remain constant, is expressed by 'means' of his second "critical condition", namely that "the state of preference and motives_for holding and acquiring sources of income remains constant." His third condition expresses the requirment that the first two conditions prevail over a long enough period for the . economy to arrive at an equilibrium. The derivation of the equilibrium follows the textbook treatment by Milton Friedman in his "Price Theory" (A provisional Text, Chicago, Aldine, 1962. Chapter 13). The equilibrium is stationary and is Waracterized by zero net savings and investment and consequently by a stationary stock of reproducible means of production. Professor Schultz emphasizes that throughout this discusion the reproducible means of preduction" include not only the mate rial factors but also the skills and capabilties of man that are augmented by investment in him and that are useful to him in his economic endeavour.
Dear Reader,
