W. Arthur Lewis

Arthur Lewis is a redirect to this article. Further meanings are listed under Arthur Lewis (disambiguation) .

Sir William Arthur Lewis (born January 23, 1915 in Castries , St. Lucia , † June 15, 1991 in Saint Michael , Barbados ) was a British economist and is, together with Theodore W. Schultz , recipient of the Alfred Nobel Memorial Prize for Economics of 1979 . He is the developer of the Lewis model named after him . He tried to show how the misery in the countries of the Third World could be alleviated by means of suitable economic measures through greater economic growth. In doing so, he particularly looked at industry and agriculture in Third World countries and their dependencies on the industrialized countries .

Life

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

In 1962 Lewis was elected to the American Academy of Arts and Sciences , 1966 to the American Philosophical Society and 1974 to the British Academy . He was beaten to a Knight Bachelor's degree in 1963 and received the Alfred Nobel Memorial Prize for Economics in 1979 together with Theodore W. Schultz .

In 1983, Lewis served as president-elect of the American Economic Association .

research

W. Arthur Lewis first described his model of the dual economy, which was later also called the Lewis model in his honor, in the 1954 article Economic Development with Unlimited Supplies of Labor . With this publication he not only laid the foundation for the development of the discipline of development economics, but one can even go so far as to say that much of the literature that followed is an explanation of the ideas formulated by Lewis in 1954. The award of the Alfred Nobel Memorial Prize for Economics in 1979 is closely related to the development of his model of the dual economy. As part of his dualism model, Lewis belongs to a manageable group who put the question of the development of poor countries at the center of their scientific work as early as the 1950s.

Lewis's study of today's industrialized countries served as preparatory work for his model, with a special focus on Great Britain. He was particularly influenced by the work of economic historians such as Barbara and John Hammond or TS Ashton, who dealt with the industrial revolution in Great Britain. Lewis concluded that British industrialization and subsequent European industrialization had also used the surplus labor system. Lewis, however, did not want, as many critics believe, that industrialization, as it happened in Great Britain, would be repeated in the developing countries, since this uncontrolled kind of industrialization in England in the 19th century led to the slum formation and misery of a large part of the population would have.

The basic idea of ​​his model lies in the rejection of the neoclassical assumption that the production factor labor is limited. Lewis, contrary to this view, assumes that there is an unlimited number of workers. This assumption underlies Lewis's search for a solution to two problems: first, what determines the relative prices of steel and coffee, and second, why wages remained constant during the industrial revolution, even though profits rose are. Lewis describes the moment of knowledge and thus the hour of birth of the model of the dual economy as follows in a self-written biography: “One day in August, 1952, walking down the road in Bangkok, it came to me suddenly that both problems have the same solution . Throw away the neoclassical assumption that the quantity of labor is fixed. "

Furthermore, Lewis assumes a duality of the market and differentiates between a traditional agricultural sector and a modern industrial sector. The agricultural sector serves the industrial sector as a permanent and unlimited supply of labor.

Definition of the two sectors:

• traditional agricultural sector: low wages, low productivity, little capital, no modernization
• modern industrial sector: high wages, capital intensive, investment, modernization

Basically, it is about a labor transfer between the two economic sectors mentioned. The surplus labor in the agricultural sector should move to the industrial sector and increase productivity there and thus stimulate growth, industrialization and modernization. As the industrial sector is growing rapidly, it can absorb any surplus labor. It should be noted, however, that the labor force that is lost in the agricultural sector does not have a negative impact on productivity and thus its output. This theory is based on the assumption that the agricultural sector has a limited input, namely land, and that there are therefore a number of workers who are not essentially involved in the output and whose productivity is negligible and therefore equal to 0. If these surplus workers now move to the industrial sector, they will get productivity 1 without affecting the output of the agricultural sector. The output of the agricultural sector therefore remains the same, with production in the industrial sector increasing.

Along with this labor transfer, wages will also rise. Since, as already mentioned, the migrant workers in the agricultural sector do not reduce its productivity, those who remain in the traditional sector receive higher wages. In the modern sector, wages are rather low in the early phase of industrialization. Rising wages in the agricultural sector will sooner or later lead to a halt in the transfer of labor, and when this turning point is reached, i.e. when the labor supply is exhausted, economic growth leads to a general rise in wage levels.

The most important actors in this are the entrepreneurs of the modern sector, because only if they reinvest their profits can further growth occur. The driving force behind industrialization is therefore a capitalist class, the entrepreneurs.

criticism

Theodore W. Schultz , who together with Lewis received the Alfred Nobel Memorial Prize, argues against the Lewis model with numerous studies of the agricultural sector, which prove that the labor withdrawn from the agricultural sector has a negative impact on the output of the traditional sector. So he doubted Lewis's assumption that many workers in the agricultural sector have a productivity of 0 and thus do not participate in the output.

Lewis puts the emphasis on a closed economy in which there is only marginal exchange between the two economic sectors. A big exception here is the transition of labor. However, this point of his dualism theory was a frequent point of attack for critics and he himself recognized that the majority of the world's economies were not closed. For this reason he later began to increasingly turn to the open economies, which he also found explanations for the slow economic change in many underdeveloped countries.

A major criticism of Lewis's theory is its sheer focus on economic growth and the neglect of factors such as poverty and unequal distribution, which would probably be the focus of today's debate. In a modified Lewis model, countries would have to make additional investments in social security and to minimize inequalities in order to avoid social tensions and political instability.

Criticism is also leveled at the neglect of the development of the agricultural sector which goes hand in hand with the promotion of industrialization. Excessive labor migration to the modern sector has also been criticized, particularly in light of rising urban unemployment in many developing countries.

reception

According to the development economist Hans-Heinrich Bass , the Theory of Economic Growth can be seen as a blueprint for state involvement in the economy of almost all developing countries up to the mid-1970s. The advancing state pessimism ended further reception. In addition, today dualistic thinking is seen as inadequate - both on a global scale (primarily through the differentiation of developing countries into Newly Industrializing and Least Developed Countries) and within the framework of the developing countries themselves (for example through the recognition of the informal sector as a separate mode of production beyond the traditional and modern sector).

Publications

• The Theory of Economic Growth. RD Irwin, 1955
  • The theory of economic growth. Mohr (Siebeck), Tübingen 1956

literature

• Hans-Heinrich Bass : Lewis, William Arthur. The Theory of Economic Growth. In: Dietmar Herz & Veronika Weinberger (Hrsg.): Lexicon of economic works. 650 groundbreaking writings from antiquity to the 20th century. Verlag Wirtschaft und Finanz im Schäffer-Poeschel-Verlag, Stuttgart / Düsseldorf 2006, ISBN 978-3-87881-158-9 , pp. 281–282.
• Fields, Gary S .: Dualism in the Labor Market: A Perspective on the Lewis Model after half a Century . In: The Manchester School . tape 72 , no. 6 , 2004, p. 724-735 , doi : 10.1111 / j.1467-9957.2004.00432.x .
• Ghosh, Dipak: A Lewisian Model of Dual Economy with Rural-Urban Migration . In: The Scottish Journal of Political Economy . tape 32 , no. 1 , 1985, pp. 95-106 , doi : 10.1111 / j.1467-9485.1985.tb00790.x .
• Kirkpatrick, Colin and Armando Barrientos: The Lewis Model after 50 years . In: The Manchester School . tape 72 , no. 6 , 2004, p. 679-690 , doi : 10.1111 / j.1467-9957.2004.00429.x .
• Mosley, Paul: Institutions and politics in a Lewis-type growth model . In: The Manchester School . tape 72 , no. 6 , 2004, p. 751-774 , doi : 10.1111 / j.1467-9957.2004.00434.x .
• Tignor, Robert: Unlimited Supplies of Labor . In: The Manchester School . tape 72 , no. 6 , 2004, p. 691-711 , doi : 10.1111 / j.1467-9957.2004.00430.x .
• Ranis, Gustav: Arthur Lewis' Contribution to Development Thinking and Policy . In: The Manchester School . tape 72 , no. 6 , 2004, p. 712-723 , doi : 10.1111 / j.1467-9957.2004.00431.x .

Web links

• Information from the Nobel Foundation on the 1979 award ceremony for Arthur Lewis
• Sir W. Arthur Lewis, 1915-1990 , Bibliography and Web Links, The History of Economic Thought Web site by Gonçalo L. Fonseca at the New School

Individual evidence

1. ^ Member History: Sir Arthur Lewis. American Philosophical Society, accessed December 14, 2018 . 
2. ^ Deceased Fellows. British Academy, accessed June 29, 2020 . 
3. ^ Past and Present Officers. aeaweb.org ( American Economic Association ), accessed October 27, 2015 . 
4. ↑ Kirkpatrick and Barrientos 2004: 679
5. ↑ Tignor 2004: 691
6. ↑ Tignor 2004: 708
7. ↑ Tignor 2004: 698
8. ↑ Tignor 2004: 692
9. ↑ Tignor 2004: 699
10. ↑ Tignor 2004: 697
11. ↑ Quoted from: Tignor 2004: 697
12. ↑ Fields 2004: 724f
13. ↑ Fields 2004: 727ff
14. ^ Gosh 1985: 95
15. ↑ Ghosh 1985: 95f
16. ↑ Fields 2004: 729f
17. ↑ Tignor 2004: 700f
18. ^ Ranis 2004: 717
19. ↑ Tignor 2004: 706f
20. ^ Fields 2004: 733
21. ^ Mosley 2004: 760
22. ↑ Kirkpatrick and Barrientos 2004: 684
23. ↑ Bass 2006: 281f