ABSTRACT
Nicholas Kaldor and Gunnar Myrdal are regularly cited as central figures in the development of the theory of circular and cumulative causation. They are seen as complementary figures, each improving our understanding of different aspects of the broader circular and cumulative causation process. Kaldor ([1966] 1978: 198) emphasized the role of manufacturing and increasing returns to scale as the engine of growth, and the possible limiting factor of effective demand, while Myrdal (1957) emphasized the importance of socio-economic factors in the development process. There does exist, however, a fundamental methodological difference between these two key figures regarding the role conceptual stages of growth play in understanding the process of circular and cumulative causation. This difference centres on the extent to which we can employ distinct “stages of growth” in our conceptual understanding of the circular and cumulative causation process. Myrdal (1968), on the one hand, explicitly rejected the use of “stages” for explaining historical development. His most explicit treatment of this issue is in Appendix 2 of Asian Drama. There he gave four reasons why stages theories were not compatible with the theory of circular and cumulative causation:
• implicit in stages models is a belief that the transition from “early” to “late” stages is inevitable;
• there is a bias against the need for government intervention through active policy to give shape and direction to the development process;
• they cannot explain events that do not fit the preconceived scheme of stages; • in the face of conflicting evidence, the evidence is dismissed by qualifica-
tions and reservations that make the stages approach tautological.
