Journal Article The Welfare Significance of Productive Labour Get access Hla Myint Hla Myint Rangoon and Manchester Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 11, Issue 1, Winter 1943, Pages 20–30, https://doi.org/10.2307/2967516 Published: 01 December 1943

Oxford University H ow far is the economic theory of the industrially advanced countries applicable to the underdeveloped countries? This question has been raised, at one time or other, by a variety of people. Some of the sociological writers have questioned the applicability of the concept of the "economic man" to the underdeveloped countries where traditional values and attitudes still prevail. The historical and institutional economists have argued that the generalizations of economic theory are based on the particular circumstances of the advanced countries and are, therefore, not "universally valid." Finally, there has been a long line of critics from the underdeveloped countries. In the nineteenth century, Hamilton, Carey, and List questioned the applicability of the English classical free-trade theory to the underdeveloped countries of that period, namely, the United States and Germany. They have been followed, among others, by Manoilesco from southeast Europe and by Prebisch from Latin America. With the emergence of the underdeveloped countries of Asia and Africa, the questioning of the usefulness of the "Western" economic theory to these countries has become widespread. Now, many Western economists, not normally regarded as historical or institutional economists, have joined the ranks of the critics. There are two main lines of criticism currently adopted against economic theory. The first is to elaborate the older line of criticism, stressing the differences in the social and institutional settings and stages of development between the advanced and the underdeveloped countries. This may be described as attacking the "realism" of economic theory. The second and newer line of attack is to question the "relevance" of economic theory to the underdeveloped countries. It is argued that "Western" economic theory is geared to the preoccupations of the advanced countries which, having already achieved sustained economic growth, are concerned with other problems, such as the optimum allocation of resources, the maintenance of full employment, and perhaps the prevention of "secular stagnation." Thus the conventional economic theory is likely to be out of focus, if not largely irrelevant, for the central problem of the underdeveloped countries which is to initiate and accelerate the "take-off" into sustained growth. Critics vary considerably in the emphasis they attach to these two different lines of attack.' But they share a common viewpoint on other issues. First, their attack on the applicability of economic theory to the underdeveloped countries is closely linked up with their attack on the applicability of free trade and laissez faire policies to these countries. Thus, their sharpest attack on "Western" economic theory is reserved for the "ortho-