Critical Article Review

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Critical Article Review

Abstract

The article on Economic development with Unlimited Supplies of Labor by William Arthur Lewis is an analysis on the distribution on the structural transformation as regards the economy based on primary subsistence. The critical review takes an in depth analysis of the article’s significance and methodology used in deriving of the theories, assumptions and general outcomes. A detailed conclusion on the overall basis of the research is given with critical aspects of the two economies. It is followed up by the conclusion and general assessment of the article. The assessment enables the validity of the article together with proposed improvements for future reference.
Introduction

The article on Economic development with Unlimited Supplies of Labor by William Arthur Lewis depicts the theoretical aspect of development under two sectors. The article is based on the structural transformation as regards the economy based on primary subsistence. In the analysis of the author’s findings, he determines the method of reinvesting the profits obtained from transitioning agriculture into industry to enhance the further growth. In the results, the translation helps facilitate the overall growth and development of the economy. The article addresses the issues regarding wages in starting labor concerns and investment at the initial forms, especially to the traditional sectors. Subsequently it points out to the achieved and categorical planning according to the theory fronted by the author. The article takes to task the Keynes’s assumption on the unlimited capacity of land and capital, as well as the overall effect on development. Economic development with Unlimited Supplies of Labor by William Arthur Lewis is an effective article in seeking answers to classical framework on distribution problems and solutions, accumulation, and growth in closed economy and proceeded by open one.  

Discussion

William Arthur Lewis considers the differential unlimited supply of the labor based on the two economies of open and closed. The open economy is typified by the neo-classical categorization. Where the populations exist in large numbers and relative to the present natural resources, it leads to the productivity to be considered almost negligible (Tignor 14). At times, according to Arthur, it can be given as zero. The relative payment by the worker’s wages is enhanced by the overall marginal productivity. Todaro and Smith (22) note that in some cases, the domestic services have inflated populations in countries where the trading is minimal. Arthur then declares on the law of variable proportions as means of spreading the capital in relevance to the labor. Distinction is required in the elaboration of the capitalist sector as marginal product over the subsistence gain by laborers dispels the author’s assumption.

            Capital accumulation at time leads to actualization of leveled wages in the labor. It causes the rise in wage level above the subsistence means, and this in turn affects the capitalist surplus. Arthur is categorical in dealing with this issue as two possibilities are mooted. The capital can be exported to countries where labor is in abundance (Tignor 17). Usually in the latter case, the subsistence level has to be the same or maintained. Secondly, immigration in the capitalist surplus can be encouraged. However, the alteration of the second possibility sees that there is development of new industries and investments, therefore causing an upheaval in the similar labor levels. Analysis should be emphasized in this model since, possibilities of the foreign nations raising the standard levels and translating into affecting the wage levels requires in depth research all together on the holistic approach.

            Economic development with Unlimited Supplies of Labor by William Arthur uses analyzed methodology of marginal calculation and target of the investment returns. The selected sample of the economies is then presented in graphical representation according to productivity, labor levels, and its effect on the overall economic development. In the two economies of open and closed, the methodology is pitted against investment returns and possibilities on industrial outcomes. One of the critical aspects of the methodology is pitting of the distinct capitalist sector in the neo-classic eras. Distinction is necessary in determining the relevance on the developing nations that seek to improve marginal productivity while gradually improving on the wages of labor Todaro and Smith (19). However, the sufficient outlay on a subsistence scale of the economies facilitates the initial determination of productivity. Thus, the separate forms of development can be obtained through enabled open and closed economies without compromise on misrepresentation.

            Suitability of Arthur Lewis’s growth model differs on the employment creation and labor transfer in differential sectors. The proportionality towards the capital accumulation is not inversely with the growth rates as depicted by modern sectors. Thus, the rate of job creation in similar circumstances is not obtained. Divided notion on the existence of surplus labor in the rural areas as compared to the projected full employment in majority urban areas cannot be realistic. Revered studies point that, competitive labor market sectors differ in the manner of supply of labor especially in the open sectors. The notion is dispelled since the wages cannot be driven simultaneously with growth rate and development on the moving surplus regime. The reinvestment plans of the acquired substantial capital can be achieved in both sectors of the two economies. The tendency of wages cannot be contained even under steady growth in development of the economy.

Conclusion

Economic development with Unlimited Supplies of Labor by William Arthur Lewis is an effective article in seeking answers to classical framework on distribution problems and solutions, accumulation, and growth in closed economy and proceeded by open one. The author is categorical in his conclusions on labor as he postulates that labor in subsistence basis is high. In addition, it bears a marginal productivity of almost zero or negative. The method of reinvesting the profits obtained from transitioning agriculture into industry to enhance the further growth is plausible under his assumption between the open and closed economies. In turn, the growth and development is achieved in both circumstances.

Assessment

The article on Economic development with Unlimited Supplies of Labor by William Arthur is vital in determining the effectiveness of distribution of labor towards achieving of growth and development in economies. The two economies of open and closed means enable a distinguished analysis based on methodological approach in productivity and overall effect on the wages of labor. In addition, the availing of the reinvesting mechanisms can foster growth and calculated outlay and distribution of labor in any form of economy. The classical framework in solutions towards distribution and accumulation of labor under divergent economies is well articulated. The statistical representation of the graphs depicting marginal production is easy to analyze and understand.

            The article in its part is relatively easy to understand and comprehend the literature on productivity, distribution and the marginal concepts. However, improvement needs to be made on the relevance of the statistics used given the period of the author’s analysis of the two economies. In addition, the use of model nations on the analysis has had significant changes on the economic outlay, which in turn has transformed development and investment. Significant changes have to be included on the determination of comparison methods against Keynes’s assumptions and theories. The author needs enhanced studies of the critical distinctions from the traditional sectors and availability of rural and urban settings. In general, the article is well researched, developed on the classical frameworks while it offers room for continuous research on development and distribution of labor.

Works Cited:

Tignor, Robert L. W. Arthur Lewis, and the Birth of Development Economics. Princeton, N.J: Princeton University Press, 2006. Print.

Todaro, Michael P, and Stephen C. Smith. Economic Development. London: Pearson Education Limited, 2011. Print.