ABSTRACT

Pending such an extension of development theory I can offer no more than a few suggestive remarks on the question of population growth and will instead focus on the relationship between the organisation of production in agriculture and productivity growth in a transitional economy. The rise in productivity and declining costs are the defining characteristics of innovation for Schumpeter. It may involve a new invention but need not. It can simply be a different way of doing things. Fodder cultivation on the fallow and mixed farming was a major innovation which the English yeomen farmers borrowed from Flanders. But so was the decision of the peasant in Tokugawa Japan to plant his rice seedlings in a straight line instead of dispersing them randomly. It was a better way of doing things and augmented productivity. Schumpeter's notion of innovation is virtually synonymous with increases in productivity. Hence we find it useful to incorporate his notion of innovation, along with the related issues of financing innovation and the innovator's reward, while addressing the question of how the organisation of production conditions the growth of productivity.