Comprehensive Theory of Social Development

by Garry Jacobs, Robert Macfarlane, and N. Asokan

November 15, 1997

International Center for Peace and Development

2352 Stonehouse Drive, Napa, CA 94558, USA

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Observations about Recent Development Experience

Theory as a Revealer of Potential

Untapped Opportunities

Barriers to Development

Central Thesis

Process of Emergence of New Activities in Society

The Powers of Organization



Restatement of the Theory

Three Stages of Social Development

Population Growth and Urbanization

The Role of Money in Development

Organizations of the Mental Stage



Despite 50 years of development experience, fundamental questions about development remain unanswered. The world still lacks a comprehensive theoretical framework that adequately explains such phenomenon as the very high rates of development exhibited by East Asian countries for many years, the failure of Malthusian projections, the growing contribution of non-material resources not subject to depletion, the apparent failure of market policies in the transition of Eastern Europe, and conflicting predictions about the future of work based on the contrary recent experiences of North America and Western Europe. A profusion of economic theories provide explanations for specific expressions of development, but none links all the pieces into a unified theory that adequately defines the central principles, process and stages of development. The formulation of a comprehensive theory of development would make conscious the world’s experience over the past 500 years, reveal enormous untapped potentials and vastly accelerate future progress.

This paper identifies the central principle of development and traces its expression in different fields and levels of social advancement. Development is a function of society’s capacity to organize human energies and productive resources to respond to opportunities and challenges. The paper traces the emergence of higher, more complex, more productive levels of social organization through the stages of nomadic hunting, rural agrarian, urban, commercial, industrial and post-industrial societies. It examines the process by which new activities are introduced by pioneers, imitated, resisted, accepted, organized, institutionalized and assimilated into the culture. Organizational development takes place on a foundation of four levels of infrastructure – physical, social, mental and psychological. Four types of resources contribute to development, of which only the most material are inherently limited in nature. The productivity of resources increases enormously as the level of organization and input of knowledge rises. The theory identifies the human resource as the driving force and primary determinant of development.

The evolution of social institutions act as powerful stimuli for development by increasing the frequency, intensity and efficiency of social interactions. This evolution has moved through three successive but overlapping stages of development – physical, vital, and mental – that can be described in terms of the type of organization predominant during that stage. The paper examines the role of three organizations characteristic of the three stages – urbanization, money and the Internet.

Early cities were physical organizations where people, activities, fields of life, resources and infrastructure accumulated at high levels of concentration and interacted in complex ways. The growth of population and urban population density increased the intensity of these interactions, creating the critical mass needed for the emergence of markets and generating sufficient demand to spur mechanization of production during the Industrial Revolution.

Money has played a parallel role at the social level as a medium for urbanization, multiplying economic activities by several orders of magnitude. Establishment of a money economy freed individuals from dependence on land as an essential resource for production and freed commerce from the double coincidence needed for barter trade. Money increased the frequency and speed of transactions in virtually every field of activity by making it possible for people to convert the fruits of their labor into a common currency that could be exchanged for any products or services. Money provides incentives for people to produce more than they can consume, releasing greater energy and creativity. It serves as a medium for conservation and storage of what each person produces and permits easy transfer over any distance, thereby overcoming limitations imposed by time and space and dramatically increasing the efficiency of transactions.

Internet promises to play a similar role at the mental level of information and knowledge as a medium to organize globalization. Internet is increasing the frequency, speed and efficiency of information exchange in every field – commercial, industrial, educational, scientific, political, religious, recreational, etc. Internet also overcomes the limits of time and space by enabling instantaneous access to information around the world. It increases enormously the number, intricacy and complexity of interactions made possible between individuals, organizations, facts, activities and fields of knowledge. Internet is an organized medium for bringing all existing social organizations into greater contact to release the maximum energy of society leading to unprecedented levels of social productivity and development.

Observations about Recent Development Experience

From the perspective of 10,000 years of history, human progress over the past 200 years has been extraordinary and the achievements of the past five decades are nothing short of miraculous. In two centuries social productivity has increased to the extent that the global community is now able to sustain a population 12 times as large as in 1800. From a rural-based, agrarian society in which less than three percent of the people lived in towns and cities, the human community has evolved into an urban-centered, industrial society in which the urban population now exceeds 40 percent of the total. This change has brought with it and aggravated a host of problems – overcrowding, pollution, crime, etc.—but it has also brought political freedom, economic security, education and modern conveniences to billions of people.

What is more remarkable is that this social movement continues to expand and accelerate. The 1997 UNDP Human Development Report observes that over the past 50 years the world has made greater progress in eradicating poverty than during the previous 500. Around the globe, life expectancy is climbing, infant mortality is declining, epidemic diseases are receding, famine is becoming extinct and education is becoming more widespread. Since 1950 average per capita income has tripled, in spite of unprecedented population growth, and average real per capita consumption in developing countries has doubled. These achievements raise the possibility and the hope that unprecedented levels of prosperity could soon spread to all humanity.

These accomplishments still leave more than one billion people in poverty. But there is growing evidence to suggest that today’s least developed countries could match and perhaps even exceed the achievements of the most advanced industrial nations within a much shorter time than it took for the original achievements. Beginning in 1780, it took the United Kingdom 58 years to double output per capita. The United States did it in 47 years, beginning in 1839. Japan accomplished the feat in only 24 years, beginning in the 1880s. But after the Second World War, Indonesia did it in 17 years, South Korea in 11, and China in 10. From 1960 to 1990 real per capita standards of living based on purchasing power parity multiplied twelve-fold in South Korea, seven-fold in Japan, more than six-fold in Egypt and Portugal, and well above five-fold in Indonesia and Thailand.

While the possibilities for increasing the velocity and expanding the scope of development to all countries are encouraging, it is by no means clear how quickly or to what extent they will be realized. Nor is there consensus regarding the policies, strategies and actions most conducive for that realization. Regardless of whether we consider developing countries, nations in the process of transition to market economies, or those moving from the industrial into the post-industrial phase, countries and regions are distinguished by vast differences in performance that are not easily explained or eliminated.

Among developing countries, between 1965 and 1990 per capita GDP rose by 5.5 percent annually in high performing East Asian countries compared to less than 2 percent in South Asia and about .25 percent in Sub-Saharan Africa. Much thought has gone into analysis of the Asian Tigers’ success, but no generally accepted formula has emerged from their experience that is applicable to countries at different stages of development and faced with differing conditions than those prevalent in East Asia during the past few decades.

The experience in Eastern Europe since 1990 suggests that our understanding of the development process is far from complete. The transition strategies implemented by 25 East European countries were unable to prevent widespread economic decline and social distress. Production in all 25 countries fell significantly, from a minimum of 18 percent in Poland to 45 percent in Russia, 60 percent in Ukraine and 75 percent in Armenia. Even in East Germany, where the German government and industry have pumped in more than $1.1 trillion since reunification, the expected results have not been achieved. Unemployment in East Germany has grown from very low levels to more than 25 percent, while productivity remains at one-fifth the level prevalent in the western part of the country.

Questions regarding strategy and wide disparities in performance are also found among advanced industrial nations, particularly with reference to the issue of employment. In 1990 the people of the Western world shared a powerful common anxiety about the future of work. Since then unemployment has been increasing throughout most of Europe to reach the highest levels in half a century. At the same time, it has been falling in the USA, where the employment rate has reached peak historical levels and is projected to continue rising through the coming decade. Technological development, which people everywhere feared would devour more and more jobs in the coming years, appears to be associated with opposite effects on different sides of the Atlantic.

The experience of the past two centuries has given rise to at least five major categories of development theory. Applying these theories to explain the development of 23 countries during the period 1850-1914, Morris and Adelman found that each major theory adequately explains the experience of a range of countries and periods, but none of the theories applies universally to the 19 th Century experience of all the countries. These findings suggest the need for a more comprehensive approach. Realization of this need prompted then Secretary General of the United Nations, Boutros Boutros-Ghali, to call for thoughtful reflection on development "as the most important intellectual challenge of the coming years."

Theory as a Revealer of Potential

Why focus on theory when there are so many pressing practical problems that warrant attention? Because awareness of a theoretical possibility can help us discover real opportunities and potentials that might otherwise go unrecognized and untapped. The recent acceleration of social development is an observable and measurable fact. But in the absence of a theoretical framework, it is difficult to discern, for instance, whether the astonishing accomplishments of East Asian countries over the past two decades are a temporary aberration in an otherwise very gradual process or the forerunner of even higher growth rates in future.

The power of comprehensive theoretical knowledge is dramatically illustrated by the efficacy of modern medical physiology. The human body is a highly complex organism in which multiple systems and subsystems work together as a seamless unity to maintain health and support growth and development. Each physiological function can be reduced to basic principles of physics and biochemistry that are common not only to all human systems, but all life systems as well. Hundreds of major or minor factors enter into the equations that support health. An excess or shortage of even a single factor can disturb the balance, retard growth or threaten life. Treatment may concentrate on one errant factor, but it is based on knowledge of the greater whole in which this factor operates. Medical knowledge has become so precise that analysis of the chemical composition of the blood can be used to ascertain overall health and accurately diagnose a wide variety of disorders in people of different ages and physical condition.

Society is also a complex organism in which multiple systems and subsystems work together to maintain the health of the community and support growth and development. But here the similarity ends. For when it comes to development, there is no agreement on the fundamental principles that govern social functions. Many partial theories have been put forth that help us explain specific phenomena and formulate successful strategies based on a few key factors in conditions which are stable and fall within the familiar boundaries of economic growth. But when we try to extend the theory to new and rapidly changing circumstances, such as those prevalent in Eastern Europe during the recent transition period, we find that explanations and strategies based on one or a small group of factors are insufficient to account for the variety of different results or to formulate policies appropriate for each particular circumstance. Development is a complex, multidimensional phenomenon that touches every major strand of social activity, applies to a very wide range of circumstances and passes through many different stages in its progression. An adequate theory must be sufficiently comprehensive to address this breadth of activity, circumstances and stages. Ultimately it should lead to the development of diagnostic capabilities that approach the precision achieved by medical science.

Experience from other fields demonstrates that a conscious knowledge can increase the speed and efficiency of any activity by a factor of 10 or even more. A trained mechanic or engineer easily repairs a defective machine, while an untrained user may flounder for long periods and very possibly make the problem worse. A clearer theoretical understanding of development will not only reveal opportunities that presently are unrecognized. It can also lead to the formulation of more effective strategies capable of increasing the speed and efficiency of development by a factor of ten or more.

Untapped Opportunities

Humanity has progressed very far from its modest origins. It has already created what must appear from a historical perspective almost infinite plentitude. Development theory should enable us to understand what productive power or powers have made this great accomplishment possible and what further achievements still lay in potential that can be attained through further exercise of this same or other powers. We observe today a confluence of conditions that seem to indicate that a further acceleration of social progress is possible. They include a broad range of political, economic, technological and social factors that have direct or indirect impact on development. Each in itself can support higher rates of social advancement. Taken together, their contribution could lead to accomplishments at least as far beyond present levels as society has already advanced since the beginning of the Industrial Revolution. Development theory should not only confirm or deny this possibility, but also show the precise relationship between these conditions and the greater results society seeks to obtain.

  1. Peace: Any evaluation of development potentials needs to take into account the influence of internal and external social stability on social progress. The end of the Cold War has dramatically reduced the threat of armed international conflicts and the catastrophic consequences of nuclear war, providing a far more stable and secure climate for worldwide economic expansion. War is a destroyer of development. It physically demolishes what society has accomplished. The Cold War limited the physical destruction to regional conflicts, but it directed a substantial portion of the energies and talents of the world community into an unproductive arms race. Since 1988, world military expenditure has fallen by about a third, $400 billion. If the current peaceful status is sustained, it could free up even more capital for investment and reducing the inflationary pressure of burgeoning government deficits. The long feared negative impact of reduced military expenditure on economic growth has been much less than anticipated. Falling defense spending has been followed by a surprisingly rapid recovery in defense-dependent states such as California and an unexpectedly long period of national economic expansion in the USA. This experience should help reduce the resistance to further cuts.
  2. Democracy: Since 1980, a democratic revolution has been spreading through Latin America, Eastern Europe and, most recently, Africa, freeing hundreds of millions of people from repression by authoritarian regimes. As peace provides a secure external environment for international development, democracy provides a stable and conducive environment within countries for more rapid social progress. Democracy raises human aspirations. It encourages individuals to take active initiative for their own advancement. It facilitates freer and wider social interactions. It releases greater social energy. It vastly increases the dissemination of information and the multiplication of new organizations. As the transition from monarchy to democracy was a catalyst for rapid economic advancement of Western countries over the past three centuries, the spread of democratic institutions today opens up greater possibilities for global expansion. Development theory needs to explain the dynamics of the process by which political and social conditions impact economic performance.
  3. Social Velocity: Development is a function of the velocity of social transactions. The speed of movement of information, ideas, decisions, technology, people, goods and money has significant impact on the productivity of the society and its further advancement. The ‘shrinking of the world’ through better transportation and communication opens up commercial opportunities inconceivable just a few years ago. During the past two decades the volume of international travelers, freight, telephone and other forms of electronic communication have increased by more than an order of magnitude. Between 1980 and 1994, overseas telephone traffic to and from the USA increased from 200 million to 3.4 billion calls. New technologies such as satellite-based wireless phones are reducing the cost of expanding the communications infrastructure. Electronic mail has drastically reduced the cost and increased the speed of written communications. The meteoric growth of the Internet provides instantaneous low cost access to global sources of information and commercial markets. The speed of technology diffusion is also accelerating. The Xerox machine was not introduced into India until the late 1970s, more than 15 years after its use became widespread in the USA. Three years ago, Windows 95 was launched in New Delhi just weeks after its release in the USA. Last year Intel announced its latest microprocessor simultaneously in USA, India and Beijing. A comprehensive theory needs to account for the contribution of the increasing velocity of social transactions on development in the past and its potential for accelerating social progress in the future.
  4. Technological Application: The rate of technological innovation and diffusion is one thing, the extent of technology application is quite another. Technological development far outpaces technological applications and accomplishments in even the most advanced societies. Adoption and full utilization of already proven technologies can dramatically elevate performance in every country and in every field. To cite a single example, the average yield of tomatoes in India is 8 tons per acre, yet more advanced farmers achieve yields as high as 20 tons. The average yield of tomato in California is 35 tons in California, but one of California’s leading tomato farmers with 1200 acres under cultivation routinely obtains average yields of 55 tons or more by applying advanced systems for micro-nutrient management applicable to all crops and climates. Applying more sophisticated and capital intensive technology, Israeli farmers achieve yields of 250 tons or more of tomato per acre. This wide variation in the application of technology within and between countries is nothing new. But it is a significant determinant of development and a factor that is at least partially responsive to social policies. The theory needs to explain these variations and show how they act as determinants of the development process.
  5. Global Growth Engines: The global economy is developing multiple centers and engines of growth. The impact of these factors is compounded by the globalization of economic growth. In the past, the growth of the world economy has been driven by a single country or at best by a few localized centers, while the vast majority of nations benefited only peripherally or not at all. The emergence of multiple growth centers acts as a self-generating engine that increases the overall momentum of the world economy. Valid development theory cannot limit its purview to national level policies and economic environment. It is becoming more and more necessary to consider development as a movement of global society, in which individual nations may move in different directions and advance at different rates, but remain aspects of a common movement.

Today virtually all of the known factors that support and stimulate development are more accessible and more prevalent than ever before. Education, the most essential resource for development, is far more widespread than at any time in history. Technology is far more available and so are trained people to operate it. Information, that most powerful catalyst of human initiative, is more easily obtainable through the very rapid expansion of the press, journals, telephones and fax machines, satellite television and data linkages. Investment, once thought to be a critical constraint, is pouring into developing countries and pouring from household savings into new productive enterprises. Management know-how, a traditional weakness in most developing countries, has also improved dramatically.

Barriers to Development

Development theory needs to explain the process by which these potentials are created and their role in development. It needs to explain how they combine and interact to determine the direction and speed of social progress. At the same time it should be able to account for the fact that in most instances the actual exploitation of opportunities falls far short of the potential and lags far behind the maximum pace achievable or already achieved by some other societies. Solutions are known for many of the most severe problems of development, yet these problems persist. If the unseen potentials are far more prevalent than most people conceive, the unseen barriers to progress also seem to be much more obstructive. Observation of social progress reveals three recurring types of obstacles to development – limited perception, out-dated attitudes and anachronistic behaviors.

Perceptual Walls & Apparent Dead Ends

One of the most striking characteristics of development discernible in all periods, countries and fields of activity has been the inability of society to envision or foresee its own future destiny. This attribute is usually accompanied by the contrary tendency to perceive opportunities as insurmountable obstacles. Innumerable times in history, humanity has come face to face with what it believed was a dead end to progress, only to discover sooner or later a way around or through the dead end to open up a wider field of opportunities. This description is literally applicable to the search by European seafarers for a sea route to Asia. In the 15 th Century, a great number of Portuguese vessels were dispatched in search of a route around Africa, but all of them were repelled by an impenetrable barrier when they reached the tiny Cape Bojador midway down the Western coast of the continent. The barrier was the widespread belief that Bojador represented the edge of the world and that to sail beyond it was certain death. It took persistent efforts by Prince Henry, 12 expeditions, and a very large purse to persuade one bold captain to skirt the cape and break the perceptual wall. Once done, Portugal soon discovered the Southern route to India and became a leading mercantile power.

Today humanity no longer fears the end of the earth, but powerful perceptual barriers still exist with regard to employment, technology, trade, environment, corruption, inflation and population that represent very real barriers to development the world over. Malthus was not the only one to foresee imminent doom where in fact there was enormous opportunity. In 1950 Holland’s population exceeded 5 million, reaching a density that many believed approached the ultimate limits that this tiny landmass could support. Today the Netherlands has 15 million people, almost three times the population density, yet it ranks among the most prosperous nations in the world and is a major food exporter. In the mid 1960s, India suffered from two successive years of drought and was on the verge of severe famine. An expert team sent to India by the Food and Agricultural Organization estimated that the country’s food grain production would rise by a maximum of 10% before 1970. Many Indian scientists shared this pessimistic view. Actually grain production rose 50 percent during this period and doubled within a decade to make the country self-sufficient in food grains. Had India’s leaders shared the view of the experts, the Green Revolution may never have been attempted.

Errors in assessment of future possibilities occur when we make projections of future performance on the basis of historical trends, even though changing circumstances have radically altered the environment. The development of the high yielding varieties of wheat and rice dramatically altered the equation for food production, yet was not factored into the assessment of what could be achieved. Looking forward, we often see apparently insurmountable obstacles to future progress. Looking backwards, we discover continuity and progress. History has shown time and again that there are no dead ends, only people who are unable to see the opportunities and solutions concealed behind the immediate obstacles.

Outmoded Attitudes

The most persistent obstacles to human development are not physical barriers, but out-dated attitudes. The original Iron Curtain across Europe was not established by the Soviet Government after World War II. It was put up by Turkish Muslims during the Middle Ages to prevent Christian infidels from establishing a direct overland trade route to Asia. This impenetrable barrier to land transit through the Middle East forced the Europeans to seek a sea route, eventually leading to the Portuguese discovery. Once found, direct sea trade developed and the Middle East lost the opportunity to be the central trade route between Europe and the Far East.

For a brief period in the 13 th Century Korea led the world in printing technology, introducing the use of metal for making printing blocks. This distinguished position was short-lived because Korean scholars refused to accept a 25 character phonetic alphabet that King Sejong developed to replace the thousands of Chinese ideographic characters then in use. A human attitude barred the way to a nation’s progress. Korea’s printers were soon left behind by developments elsewhere.

Fifteenth century China possessed a navy unparalleled in size, skills and technology, but their expeditions led only to dead ends. The purpose of these expeditions was to display the splendor and prowess of the Chinese emperors. They obstinately resisted foreign ways of life and discouraged trade. The Chinese developed a traditional immunity to world experience. Confucian teachings would accommodate and sequester the most astonishing novelties that mariners found. A Great Wall of the mind separated China from the rest of the planet. Ultimately, threats from the Mongols made the Chinese emperors ban all marine ventures. Fully equipped with technology, intelligence and national resources to become great discoverers, an attitude doomed them to become the discovered.

The science of medicine developed very slowly in Europe due to the reluctance of physicians to share their successful remedies, until the establishment of the Royal Society of Physicians in the 18 th Century led to more open exchange of information, support for research and medical education. One of the deepest and the most widespread of human prejudices has been faith in the unaided, unmediated human senses. When the telescope was invented for seeing at a distance, prudent people were reluctant to allow the firsthand evidence of their sight to be overruled by some dubious novel device. The eminent geographer Cremonini refused to waste his time looking through Galileo's contraption just to see what "no one but Galileo had seen.... and besides, looking through those spectacles gives me a headache." A famous mathematician, Father Clarius, said Galileo first built satellite and star-like objects into the telescope glass and then pretended to see them in the sky. Distrust of the new was for long an obstacle to the development of science. Four centuries later, Charles Darwin railed against the superstitious resistance of elder scientists to ideas that contradicted established theory, going so far as to suggest an age limit on membership in scientific associations.

The absence of roads in many parts of rural France kept the population isolated, poor, uneducated and culturally backward until late in the last century. A proposal for construction of roads in rural Gascony met with strong popular resistance because people feared that it would make them vulnerable to theft. Only after the roads were finally built did the rural population come to understand the enormous practical benefits roads provided by opening markets for farm produce and bringing modern medicine, education and manufactured goods to the countryside. The resistance of French peasants to efforts by the Government to spread education arose from the belief that reading and writing were totally irrelevant to their lives.

Today outmoded attitudes bar social advancement in every field. The expansion of world trade after 1950 has been a tremendous force for stimulating job creation and raising living standards around the world. Yet fear and resistance to expansion of trade persists among Americans and Canadians to the North American Free Trade Association, among Europeans to closer economic and monetary union, and among people in every country to freer international trade under the World Trade Organization


Development is also retarded by a plethora of anachronisms which have no other raison d’être than the momentum of past habits that refuse to die. High rates of childbirth have been traditionally practiced by the poor all over the world to compensate for high rates of infant mortality. Yet even after the introduction of modern medical technology in developing countries drastically reduced infant mortality rates in the 1950s, rates of child birth remained at high levels and have taken decades to decline to a degree commensurate with improved infant survival rates. Traditional behaviors have been slow to change until the population became more educated.

Clock makers' guilds were begun in Paris (1544) and London (1630) to enforce monopolies against foreign goods. The French guilds excluded new talent, imposed exorbitant dues on their members, and restricted the number of apprentices. The English guilds were less constricting and more favorable to development of the clock makers' crafts. When demand surged for seafaring clocks and better scientific instruments of all sorts by the mercantile powers, English clock-makers were free to respond to the opportunity and prosper.

Gold was a popular form for saving personal wealth and a hedge against inflation in many countries prior to the establishment of reliable banking systems. The safety of banks and the higher returns available from other forms of investment have gradually diminished the importance of gold as a form of savings. In some Asian countries, the traditional habit of saving and paying dowry in the form of gold jewelry has continued unabated, even after more secure and financially attractive forms of savings became widely available. The people of India possess nearly 30,000 metric tons of gold valued at $300 billion, an amount roughly twice the value of the public deposits held by Indian banks. Because India must import gold for conversion into jewelry, this form of savings removes liquidity from the national economy and prevents the reinvestment of personal savings in productive activities within the country. At a time when hundreds of billions of dollars are desperately needed for investment in roads, power plants and telecommunications infrastructure, an anachronistic habit forces the nation to depend on foreign investors while it sits on a huge hoard of untapped wealth.

UNDP has calculated that $40 billion a year would be sufficient to eradicate global poverty within ten years. Yet long after the end of the Cold War and at a time when there is not even a serious potential enemy in sight, world military expenditure remains at $850 billion a year. The war is over, but a costly, wasteful, unproductive anachronism persists.

It is possible to cite instances in which perceptual blind spots, unwarranted fears, provincial attitudes and anachronistic habits limit development in every country and every field of life. The rare few that are willing to concede that physical resources may not impose severe limits on human progress are very likely to insist that the fixed character of human nature does. History contains a record of infinite potentials discovered and countless opportunities missed due to a lack of perception, tradition-bound attitudes and insistence on anachronistic behaviors. But history also reports innumerable instances in which humanity has demonstrated the capacity to draw appropriate knowledge from its experience, overcome its limited vision and fixed behaviors and take major developmental leaps forward. In his introduction to the Brandt Commission Report, Former German Chancellor Willy Brandt expressed his hope that the problems created by men can be solved by men. Any attempt to formulate a comprehensive theory of social development must reflect the central role of human beings in both determining and overcoming self-imposed limits on social progress.

Central Thesis

Current debate in the field of development often focuses on the importance that should be given to different economic and social outcomes and the most effective policies to achieve them. Although this discussion has importance, it tends to distract attention from more fundamental issues that need to be addressed, regardless of which goals are accorded the highest priority.

A theory of development needs to begin not with goals and policies to promote development, but with knowledge of the essential nature and characteristics of development itself, for development is not a set of policies or programs or results. It is a process. This process has been taking place in societies since time immemorial, but it has acquired greater intensity and velocity during the past five hundred years and has accelerated rapidly over the past five decades. In the broadest terms applicable to all societies and historical periods, development can be defined as an upward directional movement of society from lesser to greater levels of energy, efficiency, quality, productivity, complexity, comprehension, creativity, mastery, enjoyment and accomplishment.

Although the term development is most commonly applied to economic advancement, the term applies equally to political, social and technological progress as well. Indeed, it is extremely difficult to extricate any of these fields of change entirely from the others, for they are all various expressions or dimensions of the wider development of the human collective. However, for the purposes of this discussion, we propose to focus on the field of economic development and consider other fields only at the points where they most directly interact with and influence economic progress. At the same time, we will try to establish that the same process and the same principles are applicable to all other fields of social life as well.

Many factors influence and determine the outcome of this process. There must be a motive force that drives social change, some essential preconditions for that change to occur, barriers that obstruct the process, a variety of resources such as capital and technology which contribute to the process, along with several types and levels of infrastructure that support it. All of these factors need to find an appropriate place in a comprehensive theory. However, there is one central characteristic that most clearly distinguishes development from other forms of social change, but whose importance may not always be appreciated because it is largely non-material in nature. That characteristic is organization. The essential nature of the process is the progressive development of social organizations and institutions that harness and direct the social energies for higher levels of accomplishment. Society develops by organizing all the knowledge, human energies and material resources at its disposal to fulfill its aspirations.

Human Centered Approach

Recent thought places emphasis on human development as something distinct and different from economic growth. In establishing priorities and strategies, this distinction can be useful. There is abundant evidence to show that high rates of economic growth do not necessarily lead to rapid improvements in living standards for poorer sections of the population and that greater improvement in these living standards can be achieved by strategies that do not focus exclusively on growth. This distinction focuses on development priorities and the strategies, not on the essential nature of the development process itself.

A comprehensive theory must be human centered, but not just in the sense of insisting that human beings are the rightful beneficiaries of social progress. It has also to view human beings as the source and primary motive force for development. Development is the process of human beings developing. It is the energy of people seeking to fulfill their aspirations that serves as its driving force. People’s awareness and comprehension determines the direction of the social movement. The efficiency, productivity, innovation, creativity and organizational capacities of people determine the level of accomplishment and enjoyment. Society progresses by developing and bringing forth into expression the higher potentialities of its members. The extent of people’s education, the intensity of their aspirations and energy, the quality of their attitudes and values, skills and information are crucial determinants of the process. For this reason, we conclude that the same principles of development are applicable to the development of all levels and units of human existence -- individuals, organizations, social sectors, nations and the international community. They are all expressions of the same process by which human beings acquire greater capacities and express these capacities in more productive activities.

In earlier millennia the human resource was primarily a physical instrument for manual labor, much like other work animals. Society has now developed to the point that the individual’s mental capabilities are called more and more into play. By this process, the productivity of the human being has already risen a thousand-fold. The individual who drove a bullock cart now flies an airplane or steers a ship capable of carrying huge payloads. What an individual could or could not produce in a lifetime, he or she now produces in a month or a week or a day. This process of increasing productivity is still going on. A study of this process suggests that it could continue indefinitely and without limit. As we presently utilize only a tiny fraction of the sunlight that shines upon the earth, people presently utilize only a tiny portion of their individual potentials and social opportunities. Societies also utilize only a tiny portion of their potentials. The most limiting barriers to human development are not physical. They are limitations in knowledge, vision, attitudes and aspiration for higher accomplishment. A valid theory must be able to explain the central role of these intangible factors in the development process.

Survival, Growth and Development

Our definition of development distinguishes it from two other social processes, survival and growth. Survival is the process by which a community sustains itself at the minimum level needed for its existence without any manifest tendencies for horizontal expansion or vertical advancement. A society existing at the level of survival has sufficient energy to meet the most basic human needs, but no surplus available to enhance life at the present level or to direct toward higher levels of achievement.

At the next level are societies that have grown beyond the minimum level needed for survival, but remain organized along the same lines as in the past. People in these societies may be spurred by the availability of improved technology or the example of other communities to increase their level of effort, expand the scope of their activities, and adopt modified methods or techniques, but life remains organized essentially the same as before. A quadrupling of oil prices in the mid 1970s enabled oil exporting countries in the Middle East to dramatically increase GDP and per capita incomes with little change in the organization or productivity of the society. Since Okinawa was returned to Japan by the USA in 1972, the heavy dependence of the island economy on US military bases has been replaced by dependence on transfer payments and investments in infrastructure by the Japanese Government, resulting in higher incomes and improved living standards. But the basic organization of economic activities remains the same.

Development is distinguished from survival and growth by the emergence of new or higher levels of organization. In this case there is not merely a quantitative increase in the level of activity or accomplishment but a qualitative change in the way the activity is carried out in society. Prior to the development of standing armies, the entire society was called upon to defend the community in times of war. The division of society into military and civilian components enabled the community to develop economically at the same time as it expanded or defended itself militarily. The shift from nomadic grazing to sedentary agriculture marks a major development in agriculture. Not only do the techniques differ. The organization of the activity is far more sophisticated. Instead of going out in search for harvestable crops and then migrating on to greener pastures, the farmer gathers all the necessary resources, selects and cultivates appropriate crops and sets aside a portion of the produce as seed material for the following season. The transition from a rural agrarian to an urban commercial economy, from commercial to industrial and from industrial to service economy are major developmental changes in the structure and organization of society. Similar transitions occur within each field of social activity as well.

Growth is the process of expansion or proliferation of activities at any established level of development in the continuum from primitive tribal and agrarian societies to technologically advanced industrial societies. Growth and development are distinct processes, but they are also closely interrelated, complementary and mutually supportive. Development of the society to a higher level may be preceded, accompanied or followed by significant growth in different fields. Development in narrower fields also leads to growth of the society as a whole. In either case we apply the term development to connote the qualitative vertical movement to a higher level of performance and the term growth to connote the quantitative horizontal expansion of activities at whatever level of organization the society has reached in a particular field.

The phenomenal achievements of the Marshall Plan in promoting rapid economic recovery and growth in Europe after the Second World War may have blurred the distinction between growth and development. Based on West Germany’s post war experience, it was easy to conclude that a large infusion of capital could achieve rapid advancement in the eastern part of the country. In reality, the two cases are very different. Germany’s remarkable recovery after the war is primarily an expression of growth. The physical infrastructure and industrial capacity that had been destroyed during the war were quickly rebuilt. The productive skills and social attitudes of the population were already prepared by the country’s past experience and accomplishments. They did not have to be created. In contrast, the task in East Germany since 1990 has been to rapidly establish new political, administrative and economic systems. The infusion of enormous amounts of fresh capital stimulated the growth of construction and commerce, but it has not and cannot by itself bring about these structural changes. Inadvertently it may even have aggravated the task of development by raising high expectations among the population in East Germany that their living standards would be lifted to the level of their western countrymen by central government aid and programs, rather than by their own initiative to acquire more progressive attitudes, more productive skills and more efficient social organizations.

The remainder of this paper focuses on the required conditions, essential ingredients and stages of the process of development at many different levels of society and in many different fields. Except in this context, it will not be concerned with the process of growth as it is governed and described by basic principles of economics.

Conscious Development

Human development proceeds from experience to comprehension. In the course of development, society accumulates the experience derived from the initiative of countless individuals and gradually formulates from it a conscious understanding of the secrets of success in different fields of activity. Experience comes first and full comprehension usually comes long afterwards. In this sense, we can say that the normal process of development is subconscious in that it is carried out before this conscious understanding has been fully acquired. We use the term subconscious to refer to those instances in which human beings pursue a new line of activity in any field without a conscious knowledge of the end results toward which they are moving, the obstacles and essential conditions for success, and the stages and principles governing the process of accomplishment.

Societies progress through the combined efforts of countless individuals and small groups, most of whom are only aware of and motivated to achieve their own limited goals. Yet the adoption of shared goals and common or similar strategies by these individuals and groups is utilized to elevate the society and fulfill the underlying intentions of the social collective. That which develops is the society. The society consists of diverse and divergent groups of individuals. The accomplishments of the society are the subconscious outcome and resultant expression of the combined aspirations and efforts of this heterogeneous collective.

Natural versus Planned Development

A further distinction needs to be made between the natural process of social development and planned development initiatives by governments. Natural development is the spontaneous, subconscious progression of society; planned development is the effort of governments to accelerate social progress through special policies and programs. Natural development is always subconscious. Planned development is mostly subconscious, but has the potential of becoming conscious, if the country’s leaders are able to acquire a comprehensive knowledge and apply it in the formulation and implementation of development strategies.

The theory needs to make clear the precise nature of the differences and similarities between planned and spontaneous development. In the case of planned development, government is the initiator of the process utilizing its capacity to set direction and policy for the society. In the case of natural development, individuals, groups of individuals and organizations are the initiators. But apart from this, is there really a fundamental distinction between the process of development in these two instances? Our conclusion is that there is not. The principles governing the process remain the same, regardless of who initiates or how it is initiated. This implies that the success of any planned development effort will depend on the degree to which it succeeds in fulfilling the conditions and imitating the stages of natural development.

Green Revolution

One of the most dramatic illustrations of a conscious, planned development initiative by government was the Green Revolution in India. Until the mid 1960s, agriculture in India did not differ significantly from the way it was carried out during the two centuries of British colonial rule that ended in 1947. The Green Revolution involved the introduction of new hybrid varieties of wheat developed in Mexico and the term is commonly used as a synonym for the introduction of new technology in agriculture. But the most significant characteristic of Green Revolution was not technological. It was a planned initiative by the Indian Government to raise the organization of agriculture in Indian society to a higher level.

Prior to Green Revolution, the structure of Indian agriculture consisted of subsistence level farming by isolated individual producers, primarily for their own consumption. This structure generated inadequate overall production to meet the needs of an expanding population, periodic shortages and recurring threats of famine, which had only been avoided after 1947 by imports of increasingly large quantities of food grains. Green Revolution was a comprehensive and integrated strategy to transform the organization of Indian agriculture into a closely coordinated national system capable of producing sufficient surpluses to meet the needs of the entire population and to achieve national self-sufficiency in food grains.

The Indian Government recognized that to be successful, it would be necessary to convince the farmer that the new technology could generate significantly higher yields, to ensure that the higher yields would be readily purchased without a drastic fall in farm prices, to provide for large scale import and domestic production of hybrid seeds, fertilizers and pesticides, to establish sufficient warehouse capacity to store larger volumes of food grain, to undertake research and extension activities to adapt the varieties to Indian conditions, and to educate farmers, extension workers and scientists on the new agricultural practices.

The Green Revolution strategy accomplished these multiple objectives through the establishment of a number of new quasi-governmental organizations. The Food Corporation of India was set up and empowered to purchase surplus grains from production centers and distribute them for marketing in food deficit areas, effectively establishing a national market for food grains for the first time. The Agricultural Pricing Commission was constituted to guarantee farmers a remunerative price for their produce. Other agencies were established to import and expand production of essential inputs, expand warehousing facilities, coordinate agricultural research and educational activities. This comprehensive strategy provided economic incentives to the farmer for increased production as well as financial and social incentives to agricultural scientists to embrace the new technology. A national program was conducted involving 100,000 demonstration plots in farmers’ fields to convince the farmers that the new varieties would be remunerative.

Green Revolution was not only a planned initiative of the government. It was also a conscious initiative, conceived and implemented according to a time-bound plan to achieve well-defined goals and objectives very rapidly. Unlike many other planned development initiatives, it was based on a full and correct understanding of the real needs, aspirations, and preparedness of the society and on a knowledge of what was needed to release the energy and elicit the active participation of the society. The program succeeded because it was able to create a higher level of social organization and it was able to mobilize the energy, enthusiasm and capacities of scientists and farmers.

Planned development differs from natural development in that it is an attempt by government to initiate and accelerate a process of change that would otherwise take place more slowly or perhaps not at all. The success of any planned development effort depends on its ability to provide the necessary conditions and elements required for natural development. The stages that both processes must traverse and the principles that govern them are otherwise the same. Many planned development efforts fail because they are initiated with insufficient understanding of the essential conditions and the steps necessary to mimic the natural social process. In the early years, the organizational innovations launched to support the Green Revolution were primarily controlled and managed by governments. But that fact is only incidental. The important point is that these organizations were effectively integrated with the activities of the society and attuned to support its development. During the 1960s, only government in India possessed the necessary resources and organizational capabilities to bring about such a massive organizational change so rapidly. Were comparable programs to be introduced today, the private sector could be called upon to play a much more active role.

The achievement of national food self-sufficiency within five years and a doubling of total food grain production within a decade confounded the expectations of the experts and exceeded even the most optimistic projections. But the ultimate accomplishment of India’s Green Revolution was to elevate the entire social organization of agricultural production and marketing in the country to a far higher level. This remarkable achievement illustrates the power of planned development when it is undertaken with conscious knowledge

Process of Emergence of New Activities in Society

If the emergence of more complex and efficient levels of organization is the essential characteristic of development, then we must ask what is the process that stimulates the emergence of new organizations, what are the stages through which it proceeds and the agents that determine its direction. The theory must be able to adequately explain the conditions that determine the onset of new activities, the response of society to the activities, and the speed of their propagation.

It is our view that development occurs when the subconscious preparedness of society leads to generates new ideas and conscious initiatives by individuals. The accumulated surplus energy of society releases the initiative of pioneers who apply new ideas, acquire new skills and introduce new types of activities. Imitation of successful pioneers eventually attracts the attention and overcomes the resistance of conservative forces in society, leading the society to accept and embrace the new activity by establishing customs, laws, and other organizational mechanisms to actively support its propagation. At a further stage the activity is promoted through education and family until it becomes a social institution and is assimilated into the social culture. This process can be described in terms of three phases: social preparedness, the initiative of pioneers, and assimilation by the society.

Social Preparedness for Development

The potentials for development always far exceed the initiative of society to exploit them. The actual achievements of society depend on the measure that it is ready to actively respond to new opportunities and challenges. That response is the real determinant of development. Three fundamental conditions determine a society’s level of preparedness: energy, awareness and aspiration.


The first condition is the availability of surplus energy. Development is an expression of social creativity. It requires an immense investment of creative energy for society to experiment with new modes of activity, take the risks associated with change, break the active resistance and passive inertia of fixed habits, raise standards of functioning to higher levels, acquire new skills and build higher order organizations. Moving from one level of social organization to another requires the accumulation of surplus energy as in the conversion of matter from a liquid to a gaseous state. Development is the result of surplus energy moving vertically and being organized at a higher level, rather than merely being expended in horizontal expansion at the same level. The higher level organization is able to utilize the energy more productively.

Surplus energy is available only when the society is not fully absorbed in meeting the challenges of existence at the current level. The production of material surpluses and high levels of movement and exchange are indices that surplus energy is available for development. Surpluses are a measure of accomplishment and mastery at the previous level of development. The accumulation of surpluses has been a stimulus for growth of civilizations throughout history. The production of agricultural surpluses by Athenian farmers prompted Athens to open up trade routes and become a major commercial power in the ancient world. Arthur Lewis noted the central role played in the Industrial Revolution by the growing prosperity of English farmers resulting from the commercialization of English agriculture in the previous century.

The generation of new ideas, scientific experimentation and technical innovation are also symptomatic of surplus energy. When material needs are met and social activities have become highly organized, the mind becomes increasingly active and creative. People conceive of new possibilities and mentally explore new opportunities. The breakdown of feudalism and waning of Church authority in Western Europe unleashed an explosion of new ideas and creativity during the Renaissance. The energy liberated by greater political, social and intellectual freedom ushered in the great mercantile age.

Energy is the fuel for growth in individuals, organizations and societies. Highly creative and accomplished people are often characterized by the high levels of energy they exude and by their capacity for non-stop work. Indomitable energy has been an outstanding trait of great political leaders such as Napoleon, Churchill and Gandhi and business leaders such as Andrew Carnegie, Henry Ford, and Tom Watson of IBM. Inventor Thomas Alva Edison was known to work for days on end without sleep in the process of developing 1,100 patentable inventions and founding the General Electric Company. Organizations that are growing rapidly share the same characteristic, which is apparent even to casual visitors to high tech companies in Silicon Valley. Energy is highly visible in progressive urban centers around the globe, from New York and London to Hong Kong and Tokyo. It is, therefore, not surprising that this characteristic is found abundant in societies that have achieved high levels of development or that it becomes increasingly pervasive as societies enter the take-off phase.

The importance of surplus energy is most dramatically illustrated by two conditions under which it is unable to accumulate or express itself – war and dictatorship. War destroys infrastructure and interferes with production and trade. It physically saps the energy and resources of a country. The threat of war keeps those energies perpetually directed toward self-defense, rather than self-development. Dictatorship, on the other hand, can spur development efforts up to a point, using the threat or pressure of coercion to channel initiative in desired directions. But dictatorship also blocks the free emergence of new ideas and fresh initiatives, which are the seeds of social innovation. It can ensure obedience to authority but does not spur entrepreneurship and innovation. The end of feudalism in Western Europe was an important contributor to the onset of the mercantile era and the founding of the great European commercial empires. The further transition from monarchy to democracy stabilized the internal order and provided the social foundations for the Industrial Revolution. It stimulated innovation by encouraging the free exchange of ideas and provided incentives for greater individual effort by legally safeguarding property from arbitrary confiscation.


Surplus social energy collects as potential beneath the surface, accumulating until it acquires sufficient force to burst out in new activities. It expresses initially in society as increasing thought and discussion about new possibilities, an urge for innovation and improvement, and growing dissatisfaction with the status quo. But the mobilization of this energy for action depends on fulfillment of a second essential condition -- awareness of new development opportunities and challenges. Societies that are fully consumed by the struggle for survival have little time or inclination to direct their attention outward to observe what other societies are accomplishing or forward to envision new possibilities. When life reaches a certain level of stable comfort, societies become increasingly interested in and aware of what is going on in the world around them. This awareness may also be thrust on a society by the unwanted intrusion of an external influence. The influx of English manufactured goods into the pre-industrial economies of Europe and the arrival of a modern armed American fleet in Tokyo harbor in the 19 th Century both had the effect of awakening societies to the opportunities and challenges of development and stimulating them to respond.

The increasing pace of development over the past five centuries is directly linked to an increase in the speed and reliability of information about what is taking place in other parts of the country, region and world due to improvements in communication and transportation. The proliferation of books and newspapers following the invention and diffusion of the printing press and the growth of international shipping following the invention of navigation aids beginning in the 15 th Century, the growth of railways, telegraph, and telephones in the 19 th Century, and the impact of radio, film, television, computers and satellite technology in the 20 th Century have exponentially multiplied the dissemination of information and the general level of social awareness. Today more than 60,000 newspapers are published around the globe, including 8000 dailies, with a combined circulation of 500 million and an estimated readership of 1.5 billion people.


Energy provides the fuel and awareness helps to set the direction for social progress, but one other condition must be met to unleash the development process. The society must feel a strong aspiration or felt need for achievement at a higher level that spurs efforts to convert a perceived possibility into a material reality. Social development is an expression of social will seeking to elevate the performance of the collective. As the society becomes more conscious of the external environment and its own internal potentials, its aspiration and will for progress increase. The greater the knowledge of its potentials, the greater the aspiration.

History tells us of many accomplished societies in the past that generated surplus wealth and leisure time and yet chose not to respond to opportunities, even when presented with information about the successful accomplishments of other societies. Many development workers have encountered communities in which the aspiration for further development appeared to be absent. Such incidences contradict prevalent assumptions about human motivation and are often dismissed as bizarre or primitive exceptions. A closer observation reveals that this phenomenon is far more common than we may assume in societies, organizations and individuals. The theory needs to explain the circumstances under which the motivation for development is released as well as those under which it may be curtailed by accomplishment.

Castes, classes and communities within countries respond differently to achievements and new ways of life adopted by those whom they view as socially or culturally inferior. Thus, the aristocracy of France refused to engage in commerce as an activity beneath their station. Successful French businessmen made haste to purchase royal patents of nobility and withdraw from commercial activity. Their counterparts in England invested in commercial ventures resulting in a fusion of the landed nobility and merchant class, facilitating the remarkable economic growth of Britain in the 17 th and 18 th Centuries . The educated classes in some countries respond in similar fashion to opportunities that are viewed as beneath their social station, even when the financial rewards are substantial.

Awareness of a development opportunity also fails to evoke a response from the population when it is perceived to be beyond their means to accomplish. This explains why poorer individuals and societies sometimes do not respond to the accomplishments of the rich, even when the same opportunity is open to all, why the less educated assume they cannot emulate the achievements of the more educated, and why rural communities may ignore the achievements of urban centers.

Failures to respond to opportunities arising out of a sense of social superiority or social inferiority are expressions of a common principle. People respond to the example of those with whom they identify socially. When there is awareness of a developmental achievement by one belonging to the same social and cultural context, it can evoke a powerful urge for accomplishment in society. When the achievement is by one who lies outside the context, it is often ignored. Thus, the adoption of new crops and cultivation practices by a wealthy farmer may not lead to similar behavior by smaller farmers in the same community. Age, social status, class, caste, wealth, occupation and other factors help define social identity.

There was a time when different societies, classes and groups within societies differed widely in the extent to which they manifested an aspiration for development. This is no longer as true. Over the past five decades both awareness of the possibility and the release of the aspiration for development have been spreading rapidly from one country and level of society to another. Harlan Cleveland coined the phrase "revolution of rising expectations" to describe this phenomenon which he observed in Eastern Asia in the early 1950s. Spurred by the end of colonialism and the diffusion of democracy, since then this revolution has circled the globe and ignited a clamor for education, higher levels of consumption and opportunities for advancement among billions of people. The universal awakening of this urge for progress is another compelling reason why the speed of development is increasing so rapidly.

This principle has important implications for planned development efforts. It implies that efforts by government to initiate development will only be successful in areas where the necessary social urge and preparedness already exist. Many well-conceived development initiatives fail to catch on or go awry because the leaders try to accomplish what the population has not yet come to aspire for. In these instances, the planned initiative can only contribute to preparing the society for readiness at some future date, but will not generate immediate results.

Figure 1: Social Preparedness for Development

Surplus energy, awareness of opportunities and aspiration for advancement are pre-conditions that prepare society for new development initiatives. This is not a linear process. The three factors interact with one another in complex ways to generate a growing pressure and ground swell of new activities. Accomplishment at a previous level helps release energy and aspiration for further accomplishment. Energy makes for greater alertness and awareness. Awareness of what others are doing evokes greater aspirations and provokes energetic responses. The process spirals back on itself, constantly reinforcing the forward momentum, while at the same time each new level of achievement brings a certain measure of satisfaction and security that relieve the pressure for further effort. Alternations between rising urge and rising satisfaction are one reason for the modulating rhythm of progress and stagnation that is often observed.

Initiation -- Role of the Pioneer in Development

When these three factors are present in requisite measure, the society is subconsciously prepared for change. But it still needs an agent through which to express this preparedness in action. In natural development, that is the role of pioneering individuals. Once the society is prepared, sooner or later it gives rise to the initiative of one or more pioneering individuals who break out from the existing mold and attempt something new. Although exceptional and eccentric individuals may initiate new activities in any society, these activities usually disappear with passing of their founder or give rise to isolated imitation that never acquires significant momentum. The development pioneer is a conscious product of the society whose aspiration and initiative give expression to the subconscious aspiration of the society in which he lives.

Every new developmental activity is initially conceived and introduced by one or a few pioneers. The pioneer is one who sees, believes in and acts upon an opportunity which others fail to see or believe in or lack the energy or courage to pursue. The pioneer exhibits a new understanding, new attitudes, new skills and behaviors different from those prevalent in the community at the time. If the pioneer’s initiative is in tune with the social aspiration and social preparedness, it inspires and encourages other dynamic individuals to imitate or improve upon the new initiative.

Pioneers play a crucial role wherever a new activity needs to be seeded in the community for the first time. The first farmer in a village to shift from rice cultivation or sugarcane to growing fruits or flowers for export; the first teacher in a rural town to leave the security of a salaried job to establish a private tutorial institute, and the first industrialist to acquire a new manufacturing technology from overseas all serve as role models and catalysts for development in their respective fields of activity. Viewed from the perspective of the individual, it is the pioneer who initiates the collective process. But viewed from the perspective of the society, it is the collective that expresses its intention and aspiration through the initiative of the pioneer.

The role of the pioneer is vital to development, because the next stage of social progress almost always remains unseen by the collective. It is the free thinking, far seeking individual who dares to imagine or conceive what the popular mind is unaware of and then translates that vague possibility into a reality which all can see. Henry Ford became a pioneer and model for American industry early in this century by popularizing methods for mass production. Fred Smith, founder of Federal Express, pioneered creation of a new industry, the overnight parcel delivery business. The pioneer is usually not a rare exception or anomaly in society. He shares to a large degree its aspirations, knowledge and values. By acquiring one new or different attribute or behavior, he charts a new course and reveals a new possibility, all the time basing himself on the society’s present accomplishments and in most cases moving in a direction which the society has already indicated.

Multiplier Effect

It does not really matter whether pioneers come forward on their own internal prompting or in response to an opportunity or demonstration created by government. In either case, the individual embodies and represents the social initiative. What does matter is the response of the society to the pioneer. Often the early pioneer meets with a response of indifference, resistance, contempt or hostility from the community around him, especially when his actions represent a radical departure from the status quo. This usually occurs when the pioneer comes too much before his time, before the society is fully ready to act on its urge for something new. At other times the successful pioneer is actively admired and respected, yet no one else comes forward to imitate his success. In either case, the pioneer’s initiative fails to catch on. If the pioneer pushes through change before the society is fully prepared, the change comes abruptly in the form of a revolution. If the society is fully prepared to accept and follow the pioneer, then the change occurs by a smooth evolution. Revolution is premature evolution.

Under appropriate conditions, the success of the pioneer leads to active imitation by other adventurous individuals who in turn serve as models for still others to imitate. In this case, the initiative of the pioneer gets multiplied over and over, rippling through the society and unleashing a development movement. The establishment of the first retail photocopy shop at a prominent location in New Delhi in the late 1970s by the owner of a typing service was an initiative whose time was right. Competing typing companies in the city quickly imitated the pioneer. Within three years the new business had spread like wildfire throughout the country. The adventurous farmer who dug the first successful borewell in a poor, backward South Indian village was initially an isolated example that others refused to follow. But when other farmers in the village saw how the pioneer’s social position was elevated by his new-found wealth, every other farmer in the village rushed to emulate him. Within two years, 440 new wells had been dug in ten surrounding villages. When India’s first software export company was founded in the 1970s, it was difficult for anyone to conceive that within a short span of time hundreds of companies would follow its example. Today India has become a world class competitor in software services with exports projected to exceed $6 billion by year 2000. Knowing how to create the appropriate conditions for unleashing the multiplier effect is essential for formulating effective planned development strategies.

Acceptance and Assimilation -- Organizing New Social Activities

The surplus energy accumulated by the society and given expression through the initiative of pioneers and their followers does not gain momentum until it becomes accepted and organized by the society. The process of organization may take many different forms. It may occur by the enactment of new laws or regulations that support the activity or it may be in the form of a new system or accepted set of practices. Each development advance of the society ushers in new and higher levels of organization. Rapid expansion of commerce in Europe during the 16 th and 17 th Centuries necessitated development of the banking system throughout Europe, as well as commercial laws and courts for civil arbitration. The huge sums required for investment in international trade gave rise to the creation of new legal entities, such as the joint stock company, which enabled individual investors to pool resources.

Each significant developmental advance leads to the emergence of a host of new organizations designed to support it and puts pressure on existing organizations to elevate their functioning to meet the higher demands of the new phase. Since 1950, country after country has been introducing organizational systems and structures to support modern business and international trade, such as business directories, franchising, lease purchase financing for industrial and consumer products, courier delivery services, credit rating and collection agencies, industrial estates, free trade zones, credit card and ATM banking services, cellular and pager communication systems, and most recently a completely new range of Internet services. Each of these organizational innovations increases the range, scope, quality, convenience, productivity or efficiency with which the available social energies can be utilized for productive purposes. The role of these organizations is most apparent in instances when they are absent. When the countries of Eastern Europe began the transition from centrally planned to market economies, they lacked many of supporting structures and practices needed for a market system to operate effectively.

One of the most effective ways in which society actively supports the organization of new activities is through the organization of formal educational and vocational training programs.

Organization Matures into Institution

At a further stage, the society accepts and assimilates the new way of functioning to such an extent that it no longer requires the support of specialized organizations, policies or laws to promote it. The activity becomes a part of the normal way the society functions. It becomes a way of life. It matures from the stage of organization to institution. An organization matures into an institution when the social acceptance becomes total. An organization is maintained by human or social agencies. An institution is self-existent. It is supported by the customs, beliefs and social tradition. It does not require agents to support and maintain it. Law is an organization upheld by the power and authority of the legislature and legislative systems, police and penal systems, courts and judicial systems. Competition is an institution upheld by the weight of social tradition that is imparted to the individual by the family, fostered through the educational system and embodied in the free enterprise system, but not dependent on any of these agencies for its existence and expression. Organizations at one stage of development give rise to institutions at a later stage. The maturation of a new activity does not necessarily mean that the formal organizations established to support it disappear, but rather they are no longer an essential support for its existence.

Cultural Transmission by the Family

At an advanced stage in the maturation of a new social activity, the family assumes an active role in its propagation. Family is a miniature of the society. The basic organization of society comes from the organization of family. Family imparts essential social training to its members in self-restraint, responsibility, human relations and goal-directed behaviors. Once a new activity has been accepted as desirable by wide sections of the population, families assume an increasing role in equipping the next generation with knowledge, skills and attitudes supportive of the activity. The hereditary transmission of occupation from father to son has taken place for millennia. Today children are no longer as likely to enter the same field as their parents, but they still acquire basic skills and attitudes that influence their occupation. When an activity has matured to the point that family plays a very active role in its transmission, the activity has become a part of the culture of the society.

Figure 2: Development of New Activities

The Powers of Organization

Viewed from a historical perspective, the process of development appears as an unlimited cornucopia perpetually spilling forth an astonishingly lavish array of new riches. A theory of development must be able to account for this phenomenal capacity of the society and reveal the source of its creative powers. This theory identifies organization as the principle source of this prodigious social creativity.

Organization is the thread out of which the fabric of development is woven. Every step of social advancement involves an elevation in the way acts are carried out. Organization is a tremendous creative power. Henry Ford’s organization of manufacturing operations enabled him to increase automobile production 500-fold, with a small amount of capital and without any significant advancement in technology. When Ford introduced the system of mass production, the average US car-maker produced 1000 to 2000 cars a year. Ford raised production to over one million cars a year. Between 1908 and 1927, his company produced more than 15 million automobiles. In the process, he reduced the time required for assembling a chassis from 728 minutes of one worker’s time to 93 minutes and brought down the price of the cars he sold from $950 to $290. Starting out with a cash base of $28,000 in 1903, by 1927 the company had accumulated a cash surplus of nearly $700 million – a 25,000-fold increase in 24 years! In the 21 st Century organization will fully emerge as the primary source of productivity and wealth.

What then is the source of the vast productive power of organization? Action or work is physical. Organization is a power of the human mind. Mind has the capacity to relate and combine individual acts to form systems that can be repeated over and over again to accomplish the maximum results with the least investment of time, energy and resources. Systems are miniature organizations. Social organizations are collections of systems coordinated in space and time to achieve specific results. The introduction of organization elevates action from the physical to the mental level. A market is a simple form of organization to bring together buyers and sellers at a particular place and specific time for purchase or exchange of goods with less expenditure of time and energy. The more advanced the organization, the greater its capacity to channel social energies efficiently to achieve greater results. The development of retailing from the small family-owned corner store to the modern department store to the mail order catalog and the Internet illustrate the impact of increasingly sophisticated organization on any field of activity.

The development of organization in society takes place both in the horizontal and vertical plane. It spreads horizontally at each level to cover the entire society with its systems. It rises vertically to achieve higher levels of complexity and higher standards of performa3nce. The horizontal expansion of organization increases its reach and extends its access. The vertical elevation of organization raises its skills, efficiency and productivity.

Education is a mental system for organizing facts. It is also a social organization for transmitting the essence of society’s cumulative experience to future generations in a concentrated and abridged form. It combines systems for the collection and categorization of knowledge, for presentation, preparation and guidance of teachers, and for instruction and evaluation of students. Over the past few centuries the organization of education in different countries has been expanding horizontally to cover the entire population at the level of primary and secondary school level. It has also been rising vertically to attain higher levels of quality, making available a greater depth and breadth of knowledge in more fields. As an advanced manufacturing system is capable of producing enormous quantities of high quality products with minimum cost and wastage, an advanced educational system imparts the maximum knowledge and develops the mental abilities of the population to the maximum extent in the minimum time.

In a similar manner, advanced commercial organizations expand horizontally and vertically to promote the maximum volume of business and wealth generation. They acquire the ability to mobilize the energies and capacities of large numbers of people, to master and apply a wide array of sophisticated production technologies, to mobilize large amounts of capital, to utilize a wide range of resources and infrastructure facilities to achieve higher levels of efficiency and productivity. The horizontal expansion of the banking system enables the society to mobilize household savings and lend funds to qualified borrowers. In India a five-fold multiplication of bank branches throughout the country between 1966 and 1979 contributed to a five-fold increase in bank deposits within a 13-year period. At the same time, the establishment of higher order specialized financial agencies with expertise in specific sectors has supported growth of investment in fields such as agriculture, industry and exports. Computerization has recently begun to improve the efficiency, quality and range of banking services.

The stock exchange is an organization that enables those with surplus savings to invest in productive enterprises that require capital for their growth and that can utilize it profitability to create greater wealth. Access for investors is made possible by a system of brokers who are authorized by the exchange to buy and sell securities. Originally brokers had to be physically situated at the exchange in order to monitor performance of different stocks and perform transactions. Technology now enables brokers to access information and conduct trades from anywhere in the world. It is even permits investors to by-pass the broker and conduct transactions for themselves, thereby changing the nature of the organization. The creation of more sophisticated investment products such as mutual funds, futures and derivatives has elevated the organization of investment to a higher level that incorporates more variables and can be used to reduce the risk of specific events. As a result of these advances, the process of raising money, trading securities and investing surplus funds has been made far more productive than ever before.

Organizations as the Skills of Society

The emphasis of development theory on social organizations and institutions is certainly not new. In the study cited earlier, Morris and Adelman identified five major categories of development theory that recognize the central role of institutional changes in development. These theories differ as to which institutional changes are most significant and as to the motive force that brings about these changes. None of the theories adequately explains the relationship between the social organizations that drive the development process and the underlying society that undergoes this process. Organization is simply presented as an important factor with no organic relationship to the society in which it arises. This theory attempts to show that social organizations are a natural outgrowth and projection of emerging energy, knowledge, skills and values in the society. They are at once the means and the expression of society’s development.

We have explained earlier how the initiative of the pioneer can lead to imitation by other pioneers and eventual acceptance of a new activity in society. What we are actually describing is the process by which the society acquires new skills. Individuals or organized group of individuals attempt a new activity one or more times until they discover a way to conduct the activity successfully. In the process, they acquire the knowledge, skills and values necessary for the new activity. Those who imitate the pioneers also acquire these knowledge, skills and values. At a later stage the society learns how to encourage and support the new activity on a wider scale. It does this by disseminating the knowledge, skills and values acquired by individuals in the past and by institutionalizing them in the form of social systems. The activity matures into an organization. The acquisition by the society of the capacity to propagate the new activity is the acquisition of a new skill by the society.

Society is a developing organization of activities. A crucial determinant of social productivity is society’s capacity for coordinated, systematic functioning. Individuals increase their productivity and effectiveness by acquiring and applying higher and higher levels of physical, social and mental skills to carry out their activities. Skills enable the individual to channel and control physical movements and nervous energies to achieve mental objectives. In the absence of skills, energy is wasted and results are poor. The difference in productivity between the untrained two-fingered typist and the professional secretary may be tenfold or more. The difference in quality between the amateur violinist and the accomplished maestro is immeasurable.

The same differences exist in the quality and productivity of work in organizations and societies. Commercial organizations rise in effectiveness by elevating the quality of the systems they employ to perform routine functions. Systems are the skills of an organization that channel and direct its energies for maximum results. The remarkable growth of the Ford Motor Company was achieved by introducing a complex arrangement of physical and administrative systems designed to control the flow of materials, parts and finished products through 50,000 square feet of chutes, conveyors, tubes, hoists and assembly lines and to track purchases, inventory, job routing, labor productivity, shipping and accounting transactions with great precision. So elaborate and impressive was the organization that it prompted a reporter for a local newspaper to sum up his impression of the new factory in three words, "System, System, System."

Like the individual and the organization, societies develop by effectively directing and channeling their energies by continuously increasing the organizational efficiency with which they execute every type of activity. As skills direct the energies of the individual and systems direct the energies of the organization, organizations direct the energies of the society. Organizations constitute the skills of society. These social systems are of many types, both formal and informal. They cover the actions and interactions within and between every field of social activity. A comparison of any two countries at different levels of development will reveal significant differences in the level and sophistication of the systems they employ to carry out activities. The effectiveness of organization is determined by its authority, complexity, and capacity for coordination and integration with social needs.

Integration of Organization with Society

Organization is the mechanism by which the surplus energy in society is harnessed, mobilized, directed and channeled to produce greater results. Organization derives energy from being integrated with the society in which it functions. The energy of the society comes from its needs and aspirations. This energy pervades the social organizations established to meet these needs. The more finely the organization is tuned to fulfill underlying social aspirations, the greater the energy flowing through it. Development does not occur by the mere importation and superimposition of foreign institutions. The organization of East India Companies by several European powers expressed the competitive urge of these countries for imperial expansion overseas. These companies were backed by the political, military and productive energies of the nations they represented. The organizations they established in the colonies were integrated with the needs and aspirations of the homeland, not those of the colonies.

The will of the society changes over time as old attitudes and goals are replaced with new ones. Organizations that adapt to these changes continue to thrive. Those that remain fixed in the past mold decline, become ineffective and are eventually discarded or fade away as the East India Companies faded in the light of more civilized values in the 20 th Century. When India gained Independence, the Indian military was able to survive and make a smooth transition from functioning under the British colonial administration to functioning under a democratically elected government because its essential task remained maintenance of national security. In contrast the Indian banking system had to undergo radical change from serving the interests of a few large exporters and importers to financing agricultural and industrial activities of millions of small producers. Since the banks were nationalized in 1970, bank deposits have increased more than 100 times, because their policies and practices were drastically reoriented to serve the changing priorities of the country.

Development involves the emergence in society of organizations that reflect the aspirations of the society and are fashioned in consonance with its cultural values and ways of life. The imposition or blind imitation of external models of organization may result in artificial forms of organization that at best partially channel the social energies for development. Japan developed rapidly because it possessed the knack for adapting and molding Western institutions to its own social and cultural context. East European countries have encountered seriously difficulties and achieved disappointing results by wholesale import of Western models.

Institutions are not abstract structures or accretions that appear out of nowhere or can be transplanted with impunity. They are an outgrowth and expression of human development in the society – of changes in the knowledge, skills, attitudes and values of people.

Authority of Organizations

Organization derives productive power from authority. What distinguishes an organized social collective from a mob? The organized collective mobilizes and directs the energies and capacities of people in a controlled manner to carry out purposeful activities, whereas the mob unleashes pent-up energies in an uncontrolled manner for destruction. The capacity to control and govern human energies is an essential characteristic of all organizations.

The first human collectives most probably consisted of bands of hunters working together to obtain food and protect the members of the group. Formation of a hunting collective required the identification of a leader who could direct the actions of the group, give instructions and enforce discipline. The primary qualifications for leadership were physical strength and fighting prowess, that is, the capacity to physically enforce authority over other members of the group. Authority was essential to maintain order and discipline within the group regarding the sharing of food and work responsibilities as well as to demand courageous self-sacrifice of members in times of war. The greater the strength of the leader, the greater the stability, internal order and fighting capacity of the group. The maturation of the hunting group into an army involved a further development of organization. The military leader appointed a hierarchy of officers, each empowered with specific limits of authority. Strict obedience to those in command and unquestioned execution of instructions endowed the organized army with far greater strength.

Organizations derive power from internal authority and discipline. Western society’s reverence for freedom and individual liberty has sometimes eclipsed the vital role of authority in social organization. Without it, no organization and no society can exist or function for a moment. The greater the authority under which individuals function, the greater the accomplishment. As society progressed from the primitive fighting group to more advanced forms of human collective, the center of authority gradually shifted from the military to other centers in society. Religious, academic, administrative, political and commercial centers of power became increasingly important. The distribution of authority may have diluted the absolute authority of the military leader, but it enormously enhanced the overall exercise of authority in society. Whereas the military leader was primarily concerned with the exercise of authority to preserve peace and to conquer in war, these new centers of power exercised authority over what people believed, worshipped, taught their children, grew, produced, consumed, how they worked together and settled disputes, where they traded or traveled, what they could own, buy or sell. This more organized society acquired infinitely greater capacity to increase the productivity of its members.

During the last millennium, the evolution of authority in Western society moved from feudalism to absolute monarchy to democracy and rule of law. Power shifted from the landed aristocrat to the hereditary monarch and finally to the electorate. Each stage of this transition has brought with it a tremendous enhancement in the authority of society and in its overall development. The feudal lord was king unto himself within the limited confines of his own fiefdom, able to command the loyalty of his serfs in return for the barest subsistence existence but subject always to the threat of attack from other feudal lords or foreign invaders. Under feudalism, the society as a whole was organized at the level of survival and capable only of the lowest levels of productivity and development. The emergence of strong central monarchs greatly enhanced the power and productivity of society. The king was able to mobilize large armies for defense or conquest, to raise large sums as taxes to build roads or finance naval explorations, to issue money and protect property, to regulate crafts and promote trade to enhance the wealth of the country.

The further transition from monarchy to democracy has shifted power from concentration in a tiny aristocratic elite to distribute it over a large number of elected political leaders and administrative officials and through a increasingly complex system of laws and judicial mechanisms. At the same time democracy has extended the authority of the state enormously. In addition to maintenance of law and order and national defense, governments today exercise extensive and detailed authority over almost every aspect of life, including all forms of transportation and communication, manufacturing, export and import, banking, investment, employment, health, insurance, zoning, construction, broadcasting and preservation of the environment. Government in most countries today is the single largest employer and most of these employees exercise a measure of authority over some aspect of social life.

Contemporary thought emphasizes the limits of authority as a means for accomplishment. Under certain circumstances and up to a certain point, the imposition of authority from outside in the form of discipline and compulsion can be effective, as it was in propelling the remarkable economic and scientific achievements of Soviet Russia after the devastating effects of World War II. However, external authority is limited in its efficacy to what can be demanded of the individual or compelled by threat of punishment. It cannot produce the individual initiative, dynamism, spirit of innovation and creativity which are the driving forces for higher levels of human achievement. These forces flourish only in the measure individuals internalize the authority of society and freely accept its goals, aspirations and standards of behavior as their own. The physical man responds to external compulsion. The mental man is guided by the authority of his knowledge, opinions, attitudes and values. The transition of society from monarchy to democracy marks the replacement of external authority by internal motivation as the driving force for social development. Wherever this change has taken firm root, the productivity and development of society have increased enormously.

The central importance of authority for social development is strikingly apparent in some of the countries of the former Soviet Union today, where the authority of the state and the society have been seriously eroded. In implementing transition strategies, many people in these countries had the mistaken impression that democracy and market economies thrived in the absence of regulatory authorities, so that sweeping away the old bureaucracy would dramatically improve economic performance. They failed to understand that free markets depend as much on authority as other economic systems. Eliminate the authority that prevents price collusion, the formation of monopolies, securities fraud, tax evasion, quality standards, and arbitrary confiscation of property, then markets are no longer free or efficient. The methods of enforcement may differ in a democracy, but the importance of conformity to the rules is the same. The breakdown of law and order, the rise of monopolistic conglomerates, and spread of organized crime in Eastern Europe during the last decade is clear testimony to the necessity of authority in social development.

Corruption in many developing societies today channels huge sums of money from public service to private benefit and influences policy decisions for the advantage of the few at the expense of the many. Most governments, including those of many industrialized nations, lack the capacity to fully enforce such basic measures as tax collections. However, all authority for development does not rest with governments. The assessment of a company’s financial prospects by investment bankers and public accountants, ratings of product and service quality by independent consumer groups or scientific bodies, the certification of practitioners by organizations of professionals are also expressions of authority in the society. In the absence of these agencies, consumers hesitate to purchase new products, investors are reluctant to invest, clients have no way to determine the qualifications of lawyers and doctors, and so forth.

The ultimate source of organizational authority is the social will of the collective. To the extent that organizations are tuned to fulfill the aspirations of the society, they acquire authority. This authority may come by informal consent of those who participate in or benefit from the activities of the organization or by formal legal enactment. The right of consumers to protection from dishonest trade practices began as a social aspiration that was reflected in the consumer oriented policies of progressive retailers such as Sears. Later what the society had informally accepted as proper was augmented by specific laws defining the rights of consumers.

Complexity of Organization

One of the primary powers of organization that make it so productive is the division of labor. The division of labor did not begin with Ford’s production line. It is as old as society. It is the capacity of society to divide up the activities essential for its functioning and assign different specialized tasks to different individuals. The establishment of a permanent standing army separate from the rest of the population enabled a portion of the population to focus exclusively on productive activities while others focused on maintaining law and order and defense. Specialization of function enables people with specific endowments to do what they do best. It also enables individuals to acquire a narrow set of skills rather than trying to learn how to perform every activity for themselves. Whether for a family, a company or a society, the result of this specialization is an enormous enhancement in overall efficiency. In Ford’s factory, the combination of systems and specialization multiplied worker productivity eight times and total production 500 times.

Division of labor enables organizations to carry out vast numbers of different activities simultaneously. The greater the number of individual functions it performs, the more complex the organization. The more complex the organization, the greater its productive potential. Complexity is also enhanced by increasing the number of levels in the organizational hierarchy and the extent of coordination and integration it achieves with other organizations and activities in the same field and in other fields. Organizational complexity is powerfully enhanced by coordination between two or more separate systems or organizations. Coordination between buyers and sellers gives rise to the commodity exchange and the stock exchange. Coordination between purchasing, production and sales systems made possible the enormous improvements in efficiency and speed of delivery that have been achieved by just-in-time inventory management. Coordination of reservation, ticketing and routing systems between competing airline companies has increased the volume and reduced the cost of air travel by providing travelers with easier, more frequent connections between different airlines.

Coordination is even more powerful when it is between distinctly different types of organizations. Coordination between biotechnology and agriculture created the technology of the Green Revolution. Coordination between universities and business has aided the development and commercialization of today’s computers. Coordination between computers and telecommunication systems gave birth to the Internet. The US space program that placed a man on the moon in less than ten years was the product of one of the most complex efforts at coordination ever attempted, involving cooperation between more than 400,000 people in thousands of different public and private scientific, commercial and governmental agencies.

Values as the Ultimate Determinant

The introduction and assimilation of any new activity moves through a series of stages from formal organization to institution to culture. The further it progresses in this process, the more deeply and naturally it is integrated into the life of the society. The greater the integration, the more efficiently the activity is carried out and the more productive it becomes. The final stage of this process is reached when the activity is so fully accepted that it is internalized as a value of the society and is perpetuated by the customs and beliefs of the population without the need of any external or formal means of support.

A value is something whose importance is fully understood, accepted and cherished for its own sake. Whatever an individual or a society values, it dedicates itself to nourish and protect. Values are an ultimate organizing principle that direct and control the way human energies are expressed in activity. Values are the most powerful determinants of social accomplishment. They are laden with their own inherent authority. Physical skills direct the energies of the body for productive work. Opinions direct the energies of the mind, determining how it responds to opportunities and challenges. Values direct the motive force of personality to achieve higher standards of behavior and higher levels of accomplishment. Values are the psychological skills of society.

The efficiency of an organization is determined by its adherence to physical values such as cleanliness, orderliness, quality, regularity, and punctuality; organizational values such as discipline, standardization, systematic functioning, communication, coordination and integration; and mental or psychological values such as accuracy, honesty, respect for the individual, and harmony. Societies possess and foster these values as well. The higher the level of values to which the society is committed, the greater the society’s productivity and accomplishments. Sears won and retained the confidence of middle class American consumers for nearly a century by remaining faithful to the value "satisfaction guaranteed or your money back." The German dedication to quality has earned the highest reputation for German manufactured products around the world. The Japanese cultural commitment to harmony and consensus has powered the nation’s ascent to the highest levels of economic achievement. Growing international awareness of the importance of preserving the environment is a value that is now redefining the way humanity grows crops, manufactures products, consumes energy and disposes of wastes the world over. Values are the ultimate determinant of society’s development.

Role of Government in Organization

During the past fifty years there has been a mushrooming of new types of organizations established by governments to support development at the national and international level. Export promotion councils and processing zones, specialized banking and financial institutions, stock exchanges, vocational training institutes, industrial estates and industrial development agencies, employee insurance and pension funds, producers cooperatives, state transport agencies and industrial research institutes are examples.

The role of government as creator and manager of new organizations can have a great impact on development in the measure that these organizations are integrated with and strengthen the social organization. For development to take hold and gain momentum, it is essential that any efforts by government lead to a multiplication of social organizations and social initiative by the private sector as well. The principle of organization is not limited to specialized agencies such as those listed above. In its widest sense it applies to the entire range of formal and informal mechanisms that the society employs to direct, manage and control social energies, human initiative, knowledge, information, resources and activities of all types.

Emergence of inter-governmental and private organizations at the international level has been a driving force for international economic development during this century. Global linkages between national postal and telecommunications services, global news and weather bureaus, international bank clearing houses and maritime conventions, international standards, laws and environmental conventions have elevated the organization of activities worldwide and made human society as a whole far more productive. The international community represents the final frontier for social development. Today organizational arrangements at the international level lag far behind in complexity and sophistication the organization of development at the national level. The future prosperity and accomplishments of humanity depend on building up both the formal and informal, governmental and non-governmental linkages needed to utilize the immeasurable opportunities remaining to be tapped for global prosperity.


Society develops by building up higher and higher levels of organization. The establishment of each successive new layer of organization occurs as an overlay on the foundations of the society’s previous achievements. We refer to these essential foundations as the infrastructure for the next stage of development. The term infrastructure is commonly used to refer to the physical infrastructure of roads, ports, navigable rivers, railways and electric power that support economic activity. Here we give extended meaning to the term by including three other levels of infrastructure – social, mental and psychological -- that are necessary for further developmental achievements. The social infrastructure consists of all the laws, systems, administrative, commercial, productive and financial organizations – colleges, research institutes, banks, stock exchanges, courts, etc. -- built up during previous stages of development that serve as a foundation for future progress. The mental infrastructure includes the availability of information, the level of education and awareness in society, the technical knowledge and skills of the workforce. The psychological infrastructure consists of the collective social energy, aspirations, attitudes and values that make the society open to new ideas, responsive to opportunities, willing to change, dynamic and hard working – all of which are essential characteristics for rising to higher levels of development.

Infrastructure is the structure below. It is itself a level of organization supporting as a foundation further levels of organization above it. The infrastructure of highways is a physical organization of linked roads connecting major centers of population, production, trade and consumption making possible the organization of commerce, industry and tourism. The educational infrastructure consists of a network of schools, colleges and training institutions covering different levels and specialized fields making possible the dissemination of acquired knowledge and skills together with research and experimentation. The legal infrastructure includes an interdependent fabric of laws, law-makers, enforcement agencies, judicial authorities, penal institutions and legal practitioners that serve as an essential foundation for maintenance of peace, the organization of civil society and commercial activity. The established fields of knowledge in society are similarly organized into specialized subjects, branches and levels upon which further advances of knowledge are founded. Each successive level of development requires the establishment of an essential infrastructure to support it. This conception underscores the need for multiple levels and types of infrastructure for the successful development of any new activity. The results of any development initiative will depend on the strength and quality of the underlying infrastructure. Supplying missing infrastructures can have a strong energizing effect in society.


Resources are inputs or factors for carrying out an activity effectively. Infrastructure is that which enables us to create, develop and utilize a resource more effectively. Like infrastructure, we can divide resources into four broad types. Land, water, coal, oil, minerals, power and capital are physical resources. The social resources consist of the society’s capacity to manage and direct complex systems and activities. Knowledge, information, technology and the capacity to organize are mental resources. The energy, skills and capacities of people constitute the human resource.

Economics is very much concerned with the scarcity of resources. But when viewed from a wider perspective it becomes evident that while the quantity of some physical resources may be inherently limited, the notion of scarcity does not really apply to social, mental and human resources. Any of these may be limited in their immediate availability, but none are subject to inherent limits to their development. Organizational capabilities can be increased over time. The horizons of knowledge, information and technology are continuously expanding. The human resource becomes progressively more capable and productive.

As a society develops to higher levels, non-material resources play an increasingly important role as factors of production. This principle is embodied in the concept of the Information Age, an era in which access to information has become a valuable input and precious resource for improving the quality of decisions and the productivity of activities. One characteristic of information is that it is not consumed by being distributed or utilized, thus it is inexhaustible. Access to information now enables investors to move financial resources around the world instantaneously in search of higher returns. The increasing contribution of higher, non-material resources helps explain how societies have continued to expand productivity on a limited physical resource base.

Increasing the input of higher resources also makes it possible to more efficiently utilize the available material resources. Technological resources have made it possible during the past 15 years to increase the world’s proven and economically accessible oil reserves by nearly 50%, while reducing the finding cost by nearly 75%. At the same time technology has reduced the materials and energy input required for a wide range of products. As Green Revolution has made the soils of India far more productive than in the past, Dutch agricultural scientists have recently demonstrated that water too can be made much more productive in agriculture. They have shown that it actually requires only 1.4 liters of water to grow a kilogram of vegetables, compared to more than 1000 liters commonly utilized by traditional cultivation practices. Henry Ford’s organization of mass production dramatically reduced the requirement of human labor to assemble an automobile from 783 minutes to 93 minutes. The greater the input of higher level resources, the greater the efficiency of the activity.

These examples illustrate a fundamental principle of development. There is no such thing as a natural resource. The mind is the creator of all resources. It is the application of human intelligence and inventiveness that converts a substance into a resource. A resource emerges when the mind evaluates a material in the context of an end use. As society develops, the application of mind continuously increases the productivity of materials, finding new applications for them and more efficient ways to utilize them. The more the mind becomes open and flexible in its outlook, the greater is its power. Primitive man found that sand was a useful resource for making bricks. Early craftsmen discovered that the application of heat could convert the sand into glass. Several millenniums afterwards, we have found that the same sand can be converted into fiber optic cables and silicon chips. Sand remains the same, but its value has been immeasurably enhanced by the application of mind. Mind, the human being, is the ultimate resource that gives value to all other resources. The capacity of the human mind to acquire knowledge and devise improved technologies is for practical purposes unlimited. The concept that scarce resources impose ultimate limitations on human development needs to be reexamined from this perspective.

The Human Resource

Economics regards human labor as one of the inputs for production of goods and services and has evolved measures of productivity in terms of the labor cost per unit of output or value of national product. This is a very limited view of the contribution of human beings to social productivity that may be useful in measuring the overall efficiency and sophistication of economic systems, but reveals only a small part of their role in social development. Up to the advent of mechanization, the most prominent role of people in development was through physical labor hunting in the forests, harvesting the fields, rowing boats, laying bricks for houses and roads. But even during the earliest stages of this process, the input of physical energy was accompanied by an input of manual skill, organizing capacity and intelligent discrimination as well. Over the centuries the physical, social and mental skills of the work force developed hand in hand with the development of technology, social organization and scientific knowledge. Each advance in the methods of production, transportation, communication, and exchange required a corresponding advance in the capabilities of the work force. Even with the widespread introduction of mechanized technologies during the past 150 years, physical labor remains an essential input for all but a few fully automated production processes. However, the skill and knowledge required today for manual workers to handle materials, operate and maintain machines, conform to work rules, safety regulations and management systems, perform quality audits and coordinate activities far exceed the capacities required even for many of the most highly skilled tasks in earlier centuries. At the same time, the proportion of the work force engaged in manual labor has declined radically with the shift from agriculture-based to industrial and service economies. Attributing social development to technological advances diverts attention from the fact that tremendous increases in the depth and breadth of knowledge and technical skills possessed by scientists, engineers, designers, inventors, technicians and operators at all levels and in all fields are responsible for the development, application, diffusion and utilization of these technological advances. Technological advances are not the accomplishments of the machine. They are the achievements of human beings.

The remarkable advances in the development of organizations conform to the same principle. It is the continued growth in the capacity of human beings to conceive, design, plan, allocate, systematize, standardize, coordinate, and integrate actions, systems and organizations into larger, more complex and more productive arrangements that is responsible for the process of social development discussed in this paper. In this sense all development reduces itself to the development of human beings.

Looking forward, we may ask what are the limits then to social development imposed by the paramount role of people in the process. We have seen that energy, knowledge, skills, attitudes, aspirations and organizational capacities are the essential determinants of human productivity. Human energy is based on physical health. It is augmented by peace, political and social freedoms. It is released by opportunities for economic gain and personal advancement. It is elevated in its expressions by education and higher values. Humanity is healthier and better fed today than at any time in the past, yet more than a billion people still live in poverty. The physical improvement in the health and nutritional levels of the poor throughout the world will provide the physical basis for far higher levels of human productivity in the future. With the elimination of wars, the spread of democratic forms of governance and market economies, the political, social and economic conditions needed to release human energies for higher levels of accomplishment are being met today more than at any time in the past. The worldwide revolution of rising expectations is one expression. In many countries today, no more than half of the population has had the benefit of even a rudimentary primary education. No country can yet claim that even a majority of its people is truly well educated. The movement toward universal education at the primary level and advancement of more and more people to higher levels of education is still gaining momentum all over the world. With each successive decade it will add immeasurably to the quality and capabilities of the work force and the development potential of society. Increasing physical security, social freedom, economic opportunity and higher education are powerful forces for the refinement of attitudes and elevation of human aspirations. The cumulative impact of these positive influences will prepare the way for far higher levels and faster rates of social development than have been achieved or conceived of until now.

Process of Individual Development

We stated earlier that the principles of development were the same for individuals, organizations and societies. The basis for this statement should now be more evident. We have said that the process of development occurs when there is an accumulation of surplus energy, awareness of opportunities and challenges, and a strong aspiration for higher accomplishment. These conditions are as applicable to individuals and organizations as they are to societies. Individuals take initiatives to further their own accomplishments when they accumulate more energy than is needed just for their survival or maintenance of the status quo. This energy gets released when the individual becomes aware of an opportunity or is confronted by a pressing challenge. The intensity of aspiration determines the intensity of the individual’s effort to exploit the opportunity or meet the challenge. We explained further the role of the pioneer and imitation in the development process. At the level of the individual, the example of other individuals is a powerful stimulus to change. Maintaining or elevating one’s social status relative to peers is an unquenchable universal urge, second only perhaps in intensity to the basic urge for survival. When the society accepts a new type of activity, it takes steps to organize it and integrate it with other activities of the society, so that other members of the collective can acquire the necessary knowledge, skills and opportunity to take it up. The individual also organizes new behaviors, acquires new skills and knowledge, and integrates them within a total life style. The aspiring entrepreneur consciously designs new systems and organizes the new activities of his business to attract investors, skilled employees and customers. The time comes when the organized activity of the society matures into an institution that can flourish even in the absence of active organizational support. So too, a time comes when the individual’s new behavior becomes a natural endowment of personality that the individual expresses naturally and effortlessly. The mature entrepreneur scrutinizes every new information and each situation looking for new opportunities, considers every new contact as a prospective investor, employee or customer, and directs all his knowledge and skill for the growth of his business.

Restatement of the Theory

Development is the upward directional movement of society from lesser to greater levels of energy, efficiency, quality, productivity, complexity, comprehension, creativity, enjoyment and accomplishment. These attributes are both the means for achieving development as well as its most characteristic expressions or results. The factor that they all have in common and which imparts to them their value is organization. Higher levels of each of these attributes are the resultant expression of higher levels of organization in society. Organization is the capacity to mobilize all the available information, knowledge, material resources, technology, infrastructure, and human abilities to meet challenges and take advantage of opportunities. Development is the process of continuously enhancing the capacity of society to respond to opportunities and challenges by increasing its level of organization. Development is the process of creating newer organizations.

The fabric of society consists of intricate interrelationships and interactions between different activities, systems, organizations, institutions, ideas, beliefs and values. The process of social development occurs by increasing the scope and complexity of the organization of this fabric. The movement involves a simultaneous development of the social fabric in several dimensions:

  • Quantitative expansion in the size and carrying capacity of social activities, systems, organizations and institutions;
  • Qualitative increase in the content, productivity and sophistication of the constituent elements of the fabric;
  • Geographic or spatial extension of the organized fabric to provide more intensive coverage to larger portions of the population.
  • Integration of existing and new organizational elements into an increasingly complex network of interrelationships;

A continuous process of organizational invention and innovation spurs this movement. During each phase new organizations emerge and existing organizations take on new attributes that enable them to act as spearheads of the development process. The contribution of any of these factors may for a time become so significant that we view them as essential causes in their own right. Actually they are the live evolving ends of the underlying social organization which fashions them by its excess energy and without which they cannot exist or function.

The accumulated knowledge of the society and its increasing awareness of emerging opportunities and challenges determine the overall direction given to this development process. The energy that drives the process is determined by the intensity of the collective social aspiration for higher levels of accomplishment released by this accumulated knowledge and growing awareness. These in turn are strongly influenced by the level of organization of the social collective.

Stated in other words, society becomes increasingly conscious of its inherent capabilities, the opportunities for high achievement and the means to organize itself for that achievement. The more conscious it becomes, the more its energies are released, the clearer the direction given to those energies, the more effective and efficient the organizational arrangements it fashions to support accomplishment, and the greater the magnitude and speed of social progress.

Three Stages of Social Development

The historical perspective presented thus far may create the impression that the development process is essentially a linear progression from less organized to more organized conditions generating greater benefits for society. While this is true, it is an over-simplification of what actually occurs. This complex multidimensional process of organizational development directed and fueled by social awareness and aspiration is further complicated by the gradual evolution of the society through three stages of development. By this evolution society is progressively infused by the release of greater vital energy and by the acquisition and practical application of more conscious and complete mental knowledge.

Society advances through three overlapping stages of development involving changes in the relative roles of three fundamental components of individual and collective human consciousness. We term these three components physical, vital and mental. All three components co-exist and play a role in all stages of development. The intensity of each and their relative predominance create a series of overlapping stages, rather than clearly demarcated steps. Different societies move through these stages at different times, at different rates and with variations in the relative mix of the three components. Yet despite these differences, three distinct stages can be discerned in the development of every society and in the overall development of the human community.

In the first stage there is a prevalence of the physical component. The dominant characteristic of society at this stage is a preoccupation with physical survival, protection and preservation of the status quo. There is a strong tendency toward tradition and conservatism. This is the agrarian and feudal phase where land is the primary source of wealth and the most productive resource. The primary political and social systems are based on physical, hereditary principles. Children inherit the wealth, power, occupations and social position of their parents. There is little social mobility, especially upwards. The organization of society during this stage centers around the military and land, feudal lords controlling small fiefdoms. Commerce and money play a relatively minor role. Beliefs are grounded in the past. There is little emphasis on education, experimentation or thinking outside established guidelines defined by tradition and religious authority. Skills are passed down from generation to generation by a long, slow process of apprenticeship. Guilds restrict the dissemination of techniques. The church or state controls the dissemination of knowledge. The contribution of the human resource is predominantly in the form of physical labor. Apart from a small, privileged ruling elite, the society accords little respect, rights or value to other human beings. The pace of change during this stage is quite slow, because those factors that promote rapid development are only minimally present.

The maturation of the physical stage occurs when the physical organization of society develops to the point where the increasing productivity of physical resources generates surplus produce, energy and wealth. The reorganization of agriculture in Europe following the end of Feudalism provided the basis for the rise of commerce and later industry. The vital and mental principles become more active. The generation of surplus energy and capacity in society begin to break the bonds of tradition and overflow into new fields of activity.

During the next stage, the vital factor plays an increasingly active role. The dominant characteristics of this phase are dynamism and change. The energy level in society rises. It becomes increasingly inventive, outward looking and adventurous. This was the phase in which Europe began to explore the seas, leading to the discovery of new trade routes and new lands and ushering in the age of mercantilism. The greatest invention and discovery of this phase is the power of money. Commerce replaces agriculture as the predominant source of wealth. Money replaces land as the most precious and productive resource. The center of society shifts from the countryside to the cities and towns, where opportunities for trade and enterprise attract more and more people. The great urban centers grow rapidly. The rise of a merchant class wrests power from the hereditary aristocracy, at first gaining the support of ruling monarchs in exchange for economic rights and later leveraging its increasing wealth to make monarchs subordinate to parliaments. The organization of society expands rapidly during this period. New types of organizations proliferate. In order to provide an attractive environment for commerce, the rule of law and stable economic policies of the state gradually replace arbitrary decrees. Banks, shipping companies and trading houses proliferate. Religious institutions lose much of their political influence. New ways of life are accepted rather than frowned upon because they generate practical benefits. The practical comes to take precedent over the traditional. The mental influence increases markedly with the growth of experimentation, scientific discovery and new technologies. Increased travel, interaction between societies and greater flows of information engender greater tolerance and openness to new ideas and different ways of life. Expansion of commerce and rule of law increase the demand for and spread of education among the more prosperous classes.

Maturation of the vital stage through commercial and industrial expansion generates higher levels of surplus in society. Capital accumulation occurs on a large scale. An abundance of goods is produced and is available. The middle and upper classes grow in absolute and relative proportion, meaning that more people have surplus time, energy and money for consumption, education, travel and recreational pursuits. The aspiration for luxury and leisure penetrates to lower levels of society, inspiring the common man to yearn for more.

The third stage of development is one in which the mental component becomes more and more predominant. This stage has three essential characteristics that demarcate it from those that came before – a great increase in the practical application of mind to generate new inventions, in the social application of mind to generate new and higher levels of organization, and in the political application of mind to elevate the status and rights of individual human beings. The first distant origins of this phase in Europe can be traced back to the Renaissance and the Enlightenment, when ideas began to gain freedom from domination by church doctrine and traditional superstitious beliefs. The mental component gained influence after the Reformation, which empowered the individual to seek direct relations with God. It led eventually to the proclamation of the political ideals embodied in the American and French Revolutions and the establishment of human rights, at first in principle and much later in practice. The onset of this phase gave rise to the birth of modern science and practical experimentation. This led ultimately to the explosion of technical innovations that ushered in the Industrial Revolution, which has continued with increasing momentum for the last 150 years. Industry gradually replaced commerce as the greatest source of wealth. Technology began to challenge the position of money as the most powerful and productive resource.

Organization is a product of the mind. Therefore it is not surprising to find that the mental phase has given birth to an incredible number and variety of new forms of social innovation, equaling or perhaps even exceeding the number and variety of new technical inventions generated during this period. Huge commercial organizations have emerged, larger and more wealthy and powerful in some cases than entire countries. The world, which was criss-crossed by sailing ships in previous centuries, is now linked together and wired by a profusion of systems and structures that connect people and activities around the globe.

The physical application of mind for scientific discovery and technological invention and the social application of mind for organizational innovation have been powerful forces for social development over the past few centuries. However, the highest power of mind expresses in the field of pure ideas. It is here that mind has introduced the most far-reaching changes that are destined to transform life in the coming centuries. Ideals and ethical ideas are as old as civilization, but the practical extension of high ideas to social life has never before been accepted and attempted on such a massive scale as it is today. The mental stage has established the principle of human rights and proclaimed the value of the individual. The 20 th Century has been heralded as the century of the common man. Never before has society as a whole accorded such value and consideration for the poorest and lowliest of its citizens. The granting of universal suffrage and acceptance of the goal of universal education are unprecedented steps. Actual practices fall far short of the ideal in every society, but the direction of the social movement is clear. With every passing year new measures are introduced to extend greater physical and economic security to larger sections of the population in more countries around the world. Once this goal has been accepted by the mind of humanity, it exerts an inexorable pressure for further progress.

It is evident that the content of these three stages and the timing and circumstances of the transition from one stage to the next may vary widely between countries. However, the stamp of the physical, vital and mental components of human consciousness is remarkably similar and can be discerned even in societies that otherwise appear to have little in common. It is also evident that each country’s experience is influenced by the experience of other countries that have passed before it and by those with which it is in contact or proximity at any given time. Thus, the circumstances in which universal primary education was introduced in the Netherlands after 1618 were naturally different than the circumstances faced by Japan after 1872 or in other Asian countries after 1950 when education gained momentum in these countries. The Dutch were pioneering a new concept, whereas the Japanese were spurred to imitate the example of technologically advanced US and Western Europe, and other Asian countries to imitate Japan. This is one reason why the pace of development continues to accelerate as the world accumulates greater experience and more successful models for emulation.

Figure 1 depicts the increasing contribution of the vital and the mental components to development in recent centuries. As the vital and later the mental components gain in their contribution to productivity, the rate of development accelerates. It is worth noting that the emergence of the higher component reduces the relative, but not the absolute, contribution of the previously dominant one. In fact, each successive advance to a higher level has an invigorating effect on that which it supercedes. This is illustrated by the fact that spread of education, a contribution of the mental component, increases physical productivity.

Figure 3: Contribution of Three Components to Development

It should also be apparent that although we seem to suggest that each society passes from one stage to the next in mass, this is rarely, if ever, the case. The movement to the next phase invariably begins among the most advanced parts of the society, which means the urban centers, and among the most educated, wealthy and worldly classes. Thus New York, Paris, London, Moscow, Tokyo and Bombay have advanced much faster and further than isolated rural areas such as Appalachia, the Scottish Highlands, Siberia, Hokkaido and Bihar. Even today we can find the anachronism of near feudal communities existing almost side by side with the most modern industrial societies within the same nation state.

The Role of Organization in the Three Stages

The evolution of society through these three stages is accomplished by the progressive development of more productive, efficient and complex social organizations. At the same time, the nature of the predominant organizations also evolves from physical to vital to mental. Each transition from one stage to another results in a tremendous increase in social productivity by several orders of magnitude. An examination of the role of organization in each of the three stages reveals the source of this phenomenal increase in the capabilities of society. In the following section, we examine the contribution of three different levels of social organization to development – urbanization during the physical stage, money during the vital stage, and Internet as an organization of information during the mental stage.

Development can be likened to a chemical reaction. The speed and outcome of the reaction depends on the concentration of ingredients, the temperature and pressure, and the presence of catalytic agents. These elements determine the frequency, intensity and efficiency of contact between the substrates. The greater the concentration, temperature and pressure, the faster the molecules move and the more frequently and forcefully they interact with each other. The presence of the appropriate catalyst speeds the reaction between compatible substances by serving as a medium for bringing the substrates into proximity over a larger area. Development also depends on the speed, frequency, intensity and breadth of contacts and interactions. Social institutions act as powerful stimuli for development by increasing the number, frequency and intensity of interactions between compatible elements.

Population Growth and Urbanization

The most discernible trend during the physical stage of development is growth of population. In the physical stage, the primary goal of society was to ensure the survival of the community in the face of war, famine, and epidemic disease. The first result of progress in agriculture, defense and urban settlements was an increase in population. In the modern age of the population explosion, growth of population is often viewed as a barrier to development rather than a measure of it. But in prior centuries, population growth has always been limited by the capacity of society to sustain larger numbers of people. Until very recently, each improvement in agricultural productivity and food supply has resulted in a significant expansion of population. Before the invention of cultivation about 10,000 years ago, the total population of the world probably did not exceed 10 million people. During the next 8000 years, the world’s population increased about 30 times to reach 300 million in 1 AD. Since then it has grown another 20 fold. It reached 500 million in 1650, then doubled to cross one billion by 1800, doubled again to 2 billion by 1930, then tripled during the last six decades. The 12-fold growth of population over the past 300 years as a result of tremendous increases in food production and public health is an indication of the order of magnitude of social progress during this period. Figure 1 utilizes population growth as an index of the growth in social productivity over the last 500 years.

These enormous increases in population were made possible by tremendous advances in the organization of society around urban centers. Historically, the first major organizational innovation was the transition of primitive society from hunting and gathering to cultivation and rearing of domesticated animals between the 7 th and 3 rd Millennium BC. The capacity to generate reliable supplies of food from the land made possible the establishment of permanent sedentary human settlements. As agricultural productivity increased the supply of food, the surpluses freed more and more people from the necessity of producing and gathering food, so they could specialize in other activities. The size and location of these early settlements was limited by the productivity of the surrounding lands. Later, improved transportation made possible by the development of the wheel, roads, boats and canals enabled food to be carried over greater distances from fields to towns.

The concentration of population in early agricultural settlements led to development of fortified towns, providing physical security from external threats. The creation of towns represents the development of a higher type of physical organization. With few exceptions, these cities were very small by modern standards, rarely exceeding 100,000 inhabitants, but more densely populated than the most crowded modern metropolises. The formation of towns required the evolution of new organizations for governance, external defense, internal security, regulation of property rights, production, trade, distribution, education and religion. Within the town, the workforce divided and specialized into military, political, administrative, agricultural, industrial and commercial categories. The concentration of larger populations increased the frequency, speed and intensity of social interactions, providing far greater need and opportunity for economic exchange than occurred in sparsely populated rural areas. It created pressure on society to continuously increase food production. It created a growing market for goods and services that encouraged social inventiveness.

The growth of these population centers in turn depended upon and was facilitated by advances in the physical organization of the settlement. Towns were organized into sectors. Roads were laid, bridges were built, markets were constructed and ports were developed. In some instances aqueducts were built to transport drinking water and sewers were dug to carry away wastes and drain rainwater. This physical infrastructure enabled towns to grow into larger urban centers, further intensifying the number, size and variety of economic interactions. Cities became centers for government, trade, manufacturing, education, recreation and cultural activities. These densely populated areas where people, capital and knowledge accumulated became powerful engines for development. Packed into close quarters, news and rumors spread swiftly. The population became far more aware of what was taking place in other places. Pioneering inventions and innovations were quickly imitated by others. The growing frequency, efficiency, speed, complexity and intensity of human interactions through the organization of urban communities was the basis for the significant developmental achievements of the physical stage.

The process of urbanization that began with permanent agricultural settlements progressed very slowly up through the Middle Ages. The dual imperatives of defense and sustenance remained the principle rationale for cities and fortress towns under the feudal order. Urban communities in Europe grew more rapidly in size and number with the decline of feudalism and the rise of the mercantile era from the 12 th Century onwards. Commercial communities governed by merchant councils flourished throughout Europe and exerted continued pressure for increasing economic freedom and political autonomy from feudal and monarchical power, which led eventually to the emancipation of individuals as well. The growth of merchant cities was made possible by the rapid development of a higher level of commercial organization and the increasing role of money. The growth of the money economy ushered society into the vital stage and spurred the remarkable expansion of global economic activity that led up to the Industrial Revolution.

The final chapter in the growth of urban organizations did not occur until the sustained population explosion of the last three centuries. By the time world population crossed one billion in 1800, only three percent of humanity lived in cities of 20,000 or more. Only 45 cities in the world had populations greater than 100,000. London was still too small to qualify for this elite group of urban centers. By the time world population crossed three billion in 1960, 25 percent of humanity was living in cities. The world’s urban population rose to 40 percent by 1980 and is projected to cross 50 percent by the year 2000. This radical shift of settlement patterns over the last 200 years was spurred by the onset of the Industrial Revolution and has been fueled by the continuous emergence of ever more powerful organizations characteristic of the mental stage of social development.

The Role of Money in Development

With the rise of large commercial urban centers, the principle instrument for development shifted from physical matter to social institution -- from arable land to money. Money has been the single greatest organizational invention of the past five thousand years. The emergence of money as a preeminent social institution vividly illustrates the central role of organization in the process of social development.

The creation of money was made possible and spurred by the generation of food surpluses. One of the earliest forms of money was the receipt issued for grain deposits at government warehouses in ancient Babylon, which gradually became transferable to third parties. The capacity of early farmers to produce more food than was required for consumption by the family naturally prompted them to trade their surplus for other goods or services. As long as these exchanges were conducted by means of barter, they were severely limited both in volume and speed. Barter exchange required the double coincidence of a buyer and seller both wanting what the other possessed in surplus. It also involved a very complicated form of valuation, since every type of commodity would have a different price depending on the goods or service for which it was to be exchanged. Direct barter involving 1000 different commodities would require 500,000 rates of exchange. Barter transactions worked best within a narrow geographical area due to the physical difficulties of transporting products over long distances. The perishable nature of many products also limited barter exchanges. Producers had no incentive to produce more than they were confident of either consuming or exchanging with other consumers during the period before a product deteriorated.

The use of money spread gradually from one country to another by a process of imitation similar to the manner in which ideas, technologies and other social institutions are transmitted from one place to another and bear fruit wherever the soil is sufficiently prepared. The adoption of money in place of barter had a tremendously liberating and expansive impact on early society. As urbanization increased the number, size and speed of transactions by bringing many more people into proximity, money increased the number, size, speed, and efficiency of transactions even over long distances. The capacity to convert the fruits of one’s labor into money meant that those fruits could be stored indefinitely, overcoming the limitations of time and providing an incentive for people to exert themselves much harder and longer than if what they produced must be consumed immediately. The capacity to convert physical goods into portable money overcame the limitations imposed by space. Whereas products could be transported long distances only at considerable cost and difficulty, money could be moved quickly and inexpensively, making possible trade over much larger geographic areas. Money also provided a common standard for valuation of all products and services, thereby vastly reducing the complexity of exchange rates. By eliminating the necessity of the double coincidence required for barter trade, money made it possible for a much larger number of transactions to be completed. At the same time, its ease of movement and accounting enormously increased the speed of commercial transactions. The increasing volume and speed of transactions made possible by money combined with the increasing size and density of urban populations had an exponential impact on the development of society.

Money had a transforming effect on society equivalent in magnitude to that brought about by the emergence of urban communities. It helped liberate society from the strict confines of the land and the retarding influences of tradition, spurring the evolution from the physical to the vital stage of social development. Before money, land was the principle productive resource and source of wealth. Those who controlled the land controlled the wealth of society. The hereditary transmission of property rights during the feudal period left little incentive for individual initiative and little room for individual advancement. During the Middle Ages, European society actually reverted for a time to barter before money returned and gained ascendance. The return of money and the rise of commerce in European society coincided with the demise of the agrarian based feudal system. Money gradually replaced heredity not only as a source of wealth, but as a source of social power and privilege as well. The moneyed commercial classes became increasingly influential, creating the backdrop for the emergence of democratic values and forms of government a few centuries later. Money freed the individual from servitude to the soil. A person could earn money and use it to purchase whatever was required for personal sustenance and also utilize it as capital to earn a living. It impersonalized and democratized transactions, empowering the possessor with economic voting power that drastically reduced discrimination based on class and status. Money increased the individual’s freedom of choice and gave greater scope for the development of individual talents and potentials.

Social organizations that spur development at one stage tend to ossify and die out later on, as hunting tribes, guilds, East India companies and colonial empires, feudal and monarchical institutions have in the past. Some institutions exhibit the capacity to evolve along with society, adapting and changing to match the character of the times. Money has exhibited this capacity to evolve with the times. Sharing the characteristics of this physical stage of development, early money was itself a physical commodity, grain, gold or silver. Only gradually did representative forms of money appear, but these too were full-bodied commodity money, convertible at any time into the commodity that they represented. During the vital stage, more symbolic forms of money such as certificates of deposit, bank notes, checks, letters of credit, bonds and other forms of negotiable securities came into prominence. The complete separation of money from its physical roots came at a much later stage of social development with the appearance of fiat money that does not have a commodity value and cannot be redeemed for a commodity.

Money as an Organization

Money plays a crucial role in development. Money is the product of organization. In earlier societies, land was the principal form of wealth. The productivity of the land was the primary resource for development and that productivity depended on the organization of society for agricultural production. The growth of commerce depended on creation of more liquid forms of wealth that could be moved and traded for precious goods. Money replaced land as the principal form of wealth. But money by itself has no inherent value and cannot produce or develop anything. Money depends for its productive power on organization. The creation and operation of a money economy depended from the beginning upon the establishment of governmental organizations that could issue new forms of money, financial organizations that would honor, store and transfer it, and commercial organizations that would accept it in exchange for goods and services.

Money not only depends on organization; it is itself an organization. Money is a commodity such as gold or an officially issued coin or paper note that is legally established as an exchangeable equivalent of other commodities and is used as a measure of their comparative values on the market. It is an abstract unit of account in terms of which the value of goods, services and obligations can be measured. The systems of exchange, valuation, issuance and conversion of one form of money into another constitute elements of that organization. The value of money depends directly on the level of this organization. The more developed it becomes, the greater the productive power of money.

Money is often regarded as a unique social institution, but actually it derives its productive power from characteristics which it shares in common with other forms of social organization. Like other organizations, the development of money has occurred on the foundation of four types of organized infrastructures. In early times, a physical infrastructure of towns, ports, and roads provided the necessary conditions to stimulate the growth of commercial transactions based on money. A social infrastructure was also necessary to support the evolution of money from a commodity into a symbol. An essential requirement was for a stable government to issue and redeem the symbol for the underlying commodity. The development of money coincided with the emergence of nation states that possessed the stability and continuity necessary to stand surety for symbolic forms of money. In addition, the development of banking, stock exchanges, legislative, judicial and administrative infrastructures became essential supports for the growing use of money. In modern times, the role of money has been expanded enormously by the development of complex mental infrastructures consisting of an intricate web of technology, organization and information. Systems for international banking, telecommunications, and computerized financial transactions serve as essential infrastructure for the rapid movement of money around the world.

The emergence of money also required the development of a sophisticated psychological infrastructure in society. The progression from physical to symbolic forms of money involved a huge leap of faith for early physical man still struggling, against the direct evidence of his senses, with the concept that a round earth revolved around the sun. It must have required an irresistible urge for accomplishment and great spirit of adventure to forego the security of pure commodity money for pieces of paper and promises of redemption. The magnitude of that psychological leap is evidenced by the persistent preference of some Asian populations today for the certitude of gold in an age where much higher returns and greater security are offered by symbolic forms of money. The development of money required that people accept record keeping and systematic functioning as a way of life and have sufficient trust to deposit their funds with others. Money has long since passed from the stage of organization to that of an ubiquitous global, social institution that derives support from many organizations but does not depend on any for its existence.

As an organization, the power of money is based on authority. The value and productive power of money depends directly on the perceived strength of the issuing government and the authority conceded to it by the population. This authority has an economic aspect, its capacity to maintain fiscal discipline, to collect taxes, to prevent counterfeiting. It also has a wider political and social aspect. The value of money issued depends on the perceived strength and stability of the government, the military strength and stability of the country and its relationship with other nations, and its capacity to enforce rule of law among its citizens. Authority and trust are complementary forces. Ultimately the strength of a currency depends on the extent to which it gains the trust and confidence of society, which today means the global financial community. Remove this trust and confidence, as occurred during the US banking crisis of the Great Depression or during the recent financial crisis in Asia, and the entire monetary system is threatened with collapse. The ultimate foundation that gives force and effectiveness to this greatest of social institutions is not hard core physical assets but an intangible human value.

As an organization, money also derives power from the systems of which it is constituted and through which it acts. The value and productivity of money is directly proportionate to the quality of systems for minting, storage, accounting, transfer, exchange, savings, borrowing, investment, credit and information flows. It is indirectly proportionate to systems for administrative decision-making and enforcement, trade, manufacturing, R&D, transport, telecommunications, education and training. The productivity of money depends upon the velocity with which it circulates through these systems. Each system contributes directly or indirectly to determine the overall speed of circulation, which increases with each advance in social development. The establishment of a sophisticated global communications system now enables hundreds of billions of dollars to flow back and forth around the world on a daily basis in search of higher rates of return.

Organizations derive their power from the complexity of the activities to which they relate and the breadth of activities with which they are integrated. As the complexity of the interconnections between the synaptic junctions in the human brain determines the degree of intellectual capacity, the intricate interrelations forged between activities determine the degree of social development. Money has a powerful catalytic effect on development arising from its capacity to relate to, integrate with and energize virtually every other activity in society. Not only every variety of product and service, but also every variety of social activity has come to be valued in monetary terms. Late during the monarchical period, aristocratic titles became available to wealthy merchants for a price. Education, the traditional mark of the nobility, opened up to all with the money to acquire it. Marriage, civil claims and personal injury suits, civil and criminal judgements, tithes for religious salvation, political election and appointment, copyrights, patents, knowledge, information and even artistic inspiration have been translated into monetary terms and stimulated in their own development by the development of money. Although this characteristic of complexity and integration is most apparent with regard to money, every social institution has a similar type of impact on existing social activities. Thus, the creation of a national organization of highways or a national system of education promotes national defense, agriculture, industry, trade, tourism, recreation, education, immigration, publishing, and so forth.

The ultimate determinants of the power of social organization are the values of society. The institution of money has been so deeply accepted and internalized by every society in modern times that it would appear to have assumed the status of an ultimate value in itself. The constitutional and legal framework of the nation state provides protection for all types of property rights. Monetary incentives are utilized everywhere to encourage higher levels of individual productivity and group performance. Brushing aside hereditary claims for social status, society accords the greatest respect to those individuals, organizations and nations that have amassed the most wealth. But this apparent preeminence of the money value is misleading. The remarkable creativity and productivity of money is itself based on a bedrock of other social values without which it could not produce anything of worth. The value of money depends directly on all the values that support its functioning as an organization. These include physical values such as accuracy, orderliness, punctuality, regularity and efficiency; organizational values such as discipline, standardization, systematic functioning, communication, coordination and integration; and psychological values such as trust, integrity, harmony and creativity. Take away these intangible but priceless social accomplishments and the value of money quickly vanishes into obscure symbolism. Money is a tremendously productive social organization, but like every social organization it depends on an incorporeal human foundation for its existence.

The ultimate foundation for the value of money is not material wealth but the value of human beings. Money has grown in its power and productivity not because society has accorded it ultimate value, but because it has become an instrument and medium for fulfilling human aspirations and elevating people. The more society has come to recognize the inherent value and potential of the human being, the more productive the individual, society and money have become. Money has served as a symbol of the infinite potential for human accomplishment. As such it has released enormous energy, creativity and initiative in society. But the ultimate source of that unlimited creative energy is the individual and the society, not money.

Organizations of the Mental Stage

Knowledge is the central characteristic of the mental attribute of human consciousness which has assumed an increasingly dominant role during the last few hundreds years. Although we speak of the mental phase as being of very recent origin, it is evident that the mental component has been an active contributor to development since primitive societies developed agriculture and invented the wheel. What has changed very markedly is the relative contribution of this mental attribute, which is made visibly evident by the increasing speed of development in modern times. The knowledge that the mental component acquires and applies to further human progress has had a profound effect on all aspects of social life ranging from pure mental concepts to practical physical applications. The action of mind in four specific fields has had an especially powerful influence on the course of global development -- political thought, social organization, education, science and technology.

The development of philosophical thought and values expresses in social life as changing concepts about the purpose of life, the role and nature of human beings, and the relationship between the individual and the collective. This abstract and exalted field of mental speculation appears far removed from practical considerations. Yet it has been the source of the revolutionary thoughts and values that have radically transformed the political and social structure of civilization over the past five centuries, leading to the establishment of democratic principles and forms of governance as a global standard, if not quite yet a global practice. This movement can be traced back to the revival of humanistic thought, spread of education and secular values that arose during the Renaissance. It gained momentum with the spiritual empowerment of the individual by the Reformation, the birth of modern science, the affirmation of rationalistic ideals during the Enlightenment, and the declaration of human values by the American and French Revolutions. These movements have culminated during this century in the collapse of colonial empires following World War II and the rapid spread of democratic forms of government in Latin America, Eastern Europe and Africa over the past two decades. The tremendous release of individual energy and collective dynamism that accompanied the practical acceptance of these ideals has provided the impetus for momentous social accomplishments that until recently seemed inconceivable.


This transformation of the political organization of societies which has extended basic human rights at first to the middle class and eventually to the common man was mirrored by a parallel development of the social organization for education that was equally far reaching and powerful in its impact. Education is the systematic organization of the cumulative knowledge and experience of humanity and the transmission of that knowledge to the next generation in a concentrated and abridged form. It is the central instrument for making the past discoveries and experience of humanity more and more conscious and accessible for application by society to meet the opportunities and challenges of the future. If the distribution of political power to the entire population was inconceivable to the pre-revolutionary aristocracy and common people of Europe, then the concept and practice of universal education prevalent today would have been absolutely unthinkable. The Renaissance and Reformation led to a revival of interest in education that, like science and philosophy, had been eclipsed in Europe during the Middle Ages. Prior to 1600, education was confined to a small population consisting mostly of Christian scholars and the nobility. Both Luther and Calvin believed that every individual should read the Bible and urged establishment of state educational systems. In the 17 th Century education spread gradually but maintained a strong religious orientation. Leading thinkers of the Enlightenment stressed the importance of intellectual knowledge to the practical advancement of society and the importance of secular education. During the next century secularism and social progress began to prevail and for the first time advanced scientific and mathematical knowledge became a part of the school and university curriculum in Europe and North America. The growing recognition of the importance of education for social progress led to the extension of elementary education to the middle classes and prompted more states to assume responsibility for establishing and maintaining national school systems.

Over the last two hundred years, education has become one of the principle organizations in modern society. Since the end of World War II, it has come to be universally recognized as a principle instrument for national development, leading to a worldwide expansion of primary and secondary education along with a multiplication of colleges, universities and professional schools. At the same time, the breadth of the educational curriculum has been expanded and significantly reoriented to cover a great many areas of applied knowledge such as specialized fields in engineering, physical and biological sciences, business management, economics and most recently computer sciences. Education has awakened the mind of humanity to its innate potentials and to the enormous untapped opportunities in its external environment. This growing awareness has released infinite energy for mental creativity, social innovation and practical invention. It has raised the aspirations and expectations of people everywhere for the fruits of progress. It has equipped individuals with the mental knowledge and skills to fashion and manage more and more powerful and complex forms of social systems, and to design, manufacture and operate more and more powerful and complex forms of technology. It has created an unprecedented openness and tolerance, which are an essential basis for global development in the coming years.


Mind applying itself to the field of thought creates new concepts and more powerful ideals. Applying itself to the field of society, it creates new and improved social organizations. Applying itself to the field of matter, it discovers the physical laws of nature and creates new technologies and inventions. The application of mind’s creative powers to the field of science, technology and practical invention has had an enormous impact on social progress during the last two centuries. History reveals a slow and uneven advance in applied scientific knowledge and technology. There have been periods of great inventiveness and great discoveries in the distant past, followed by periods of stagnation. But nothing can equal in sheer numbers and significance the explosion of human invention that has occurred since the onset of the Industrial Revolution. A classic study by Lilly found that the relative rate of inventiveness rose seven-fold between 1700 and 1900 to reach a level at least ten times higher than had been achieved during earlier millennia.

A number of specific factors have contributed to this accelerating rate of inventiveness, but the essential cause has been the emergence of the mental principle as the spearhead of social development. Its energies released by politically awakening and social freedoms, its thought liberated from blind submission to tradition and refined by education, the power of mind has applied itself to transform the social and material life of humanity. Superstitious beliefs and religious dogma characteristic of the physical stage have been powerful deterrents to fresh thinking and innovation during much of human history. In the Middle Ages in Europe, inventions that seemed a little too clever or unusual were frequently condemned as satanic and their inventors persecuted. Thus, Copernicus’ heliocentric theory was rejected as inconsistent with the scriptures and remained unpublished during his lifetime. Churchmen condemned Galileo’s refracting telescope as an instrument of the devil. After he openly endorsed Copernicanism, he was sentenced to life imprisonment for ‘vehement suspicion of heresy’. The movement of rationalist thought ushered in by the Enlightenment reduced the inhibiting influence of superstition and religious dogma and cleared the way for the emergence of the experimental sciences.

There is a common tendency to view technology as a thing apart and to explain the developmental achievements of the last 200 years exclusively or primarily in technological terms. This view is inadequate because it attempts to isolate advances in technology from the general advance of knowledge and social organization characteristic of the mental stage of development. In earlier periods, scientific investigation and technological innovation were carried out as isolated activities without the support of the social organization. Prior to the 15 th Century, there were no reliable mechanisms for the recording, preservation and dissemination of inventions, so most discoveries were applied only locally and a great many were lost altogether. Individual inventors adapted and improved mechanisms for specific applications, but in most cases their innovations were never transmitted to others or standardized for widespread use. The technological developments of the Industrial Revolution would not have been possible without the organization of scientific knowledge and the establishment of scientific associations throughout Europe in the 16 th and 17 th Century. The publication of scientific journals aided the conservation and organization of society’s technical knowledge. Until legal protection for patents was introduced at the end of the 18 th Century, inventors had no way of knowing about similar inventions and no way to stake an economic right to their discoveries, except by keeping them secret. In France exclusive rights to an invention were protected by letters of patent granted only by royal authority and records were kept in a single central location inaccessible to all but a few.

Technology is knowledge of matter organized and applied through a practical organization. The widespread application of technology during and after the Industrial Revolution depended on the development of several other types of social organization. The organization of agriculture by enclosure of common lands in England generated surplus farm incomes, freed people to migrate to the towns, and fueled rapid population growth, which resulted in an increased market for manufactured goods and made mechanization feasible. The organization of urban commercial centers, transport and foreign trade created demand for larger volumes of production than could be readily produced by human labor. Poor roads in 17th Century Europe retarded industrial invention. There was little incentive to increase production so long as expansion of the market was severely hindered by poor transportation. The development of sea trade routes during the 18 th Century opened a much wider market for manufactured products, stimulating a new outburst of invention. The organization of mass production according to the principles of division and specialization of labor made the adaptation of mechanized technology practical. The organization of education equipped the society with the skills necessary to design, manufacture and utilize an endless stream of more complex and sophisticated inventions. Technology developed as an integrated part of the evolving fabric of the social organization.

The tendency to attribute invention to independent individual creativity ignores the cumulative process of discovery and innovation that builds incrementally on past accomplishments as well as the vast system of social organization that actively supports, propagates and applies the discoveries and innovations of the individual over a wide territory. Individual invention depends on and is an expression of the society’s unconscious preparedness and collective aspiration for higher accomplishment. At each stage it has to confront and overcome social resistance to further advancement. In medieval Europe the guilds imposed severe limits on new invention. The advance of medical technologies was very slow in Europe until new scientific associations persuaded physicians to disclose their successful remedies, which were previously kept secret. When Denis Papin demonstrated the first steam driven water pump and paddle wheel ship at the beginning of the 18 th Century, German authorities fearing the spread of unemployment discouraged the application of mechanized power. When John Kay developed a flying shuttle textile loom, he was denounced and physically threatened by English weavers fearing loss of their jobs and forced to flee to France where his invention was adopted by the government. When the first Jacquard loom was installed in Lyons, French silk weavers smashed it to pieces. The mechanization of agriculture in the 1890s provoked similar fears throughout rural America. The application of biotechnology for genetic engineering and the rapid spread of computers today raise widespread anxiety. However justified or fanciful the social resistance to invention may appear at the time or in retrospect, these instances underline the obvious fact that technological advancement occurs as an integral and inseparable part of the wider process of social development described in this paper. The more receptive and supportive the social organization is to technical innovation, the more of it occurs and is applied practically.


We witness today the confluence of factors that characterize the mental stage – unprecedented political freedom, a global affirmation of the individual and the rights of the common man, abundant and overflowing social energy, an irrepressible drive of mental inquisitiveness, the accumulation and codification of knowledge in all fields, the universal aspiration for and spread of education, a worldwide revolution of rising expectations, a veritable explosion of technological inventiveness, and the accelerating pace of organizational creativity and innovation, which is the technology of social development. These factors coming together in the mental stage have given birth to a new form of organization whose creativity and potential contribution to social advancement rival in importance the role played by money over the past millennium. The emergence of the Internet as a worldwide system of communication, information exchange, education and commerce is opening up vast opportunities for more rapid development. It is eliminating barriers to communication imposed by space and time, leveling the playing field between rich and poor, and making possible universal access to information and services at very low cost.

We have been tracing the evolution of social institutions that developed by a long, slow unconscious process over centuries or millennia. Now we are confronting a phenomenon that is expanding before our very eyes, proliferating globally with a speed that defies even our most sophisticated capabilities for tracking and measurement. For the first time we have the opportunity to observe the process close up at an accelerated rate that enables us to perceive those conditions that make it possible and to experience first hand as participants the social will that propels this development.

Internet was born and grew up in the USA, a social environment in which political freedom, social self-expression and individual empowerment have been elevated almost to cult status; in which widespread prosperity has distributed material comforts to the majority of people; in which higher education has been extended to more people than anywhere else in the world; in which the discoveries of science generate keen anticipation and excitement; in which the quest for information has become an insatiable thirst; in which the productive value of information has become a self-evident fact of life; and in which new technologies are accepted, assimilated and mastered with greater eagerness and facility than at any other time or place in history. Viewed in this context it is evident that the development of Internet is neither a fortuitous discovery nor an inevitable evolution of technological trends. It is a natural expression and embodiment of the aspiration of modern society for unlimited and immediate access to information and unlimited means for individual creativity and self-expression. This aspiration has released a colossal energy in society that is by no means restricted to any single country or form of expression, but rather flows and overflows through every conceivable channel that will lend itself as an outlet.

Internet’s Four-fold Infrastructure

Like every major social organization that has come before it, the emergence of the Internet has taken place on the foundations of a four-fold organizational infrastructure. At the physical level, Internet is the product of the creative convergence of two very powerful technology-based systems -- computer networks and telecommunications. The coordination of two or more systems or fields of activity unleashes a tremendous productive power. The linking together of mail order and retailing propelled the growth of Sears to become the largest retailer in the world within quarter of a century. The linking of air transport with a unique system for auctioning flowers has enabled tiny Netherlands to capture 68 percent of world trade in cut flowers.

The initial infrastructure for Internet was established in 1969 to provide a secure and survivable communications network for organizations engaged in defense-related research. Over the following two decades, it evolved into a fast, convenient, low cost means for universities and research institutions to electronically exchange information and messages. The spread of personal computers in businesses, government, schools and homes coupled with the growth of local area networks during the 1980s and early 1990s provided a means for million of individual users to link into the system. These developments propelled the growth of the Internet from a thousand or so networks in the mid-1980s to about 60,000 connected networks in mid-1995. By the middle of 1997, the Internet was available to an estimated 100 million register users worldwide.

A huge number of incremental technological advances in computer hardware and software, data transmission and satellite communications contributed to the development of the Internet. Among these, the development of a standardized graphic interface language compatible with a wide range of computing systems formed one of the final links that transformed a text oriented information system into a multimedia system for publishing, broadcasting and transactions -- the World Wide Web.

It would be a gross oversimplification and misconception to view the Internet primarily as a technological advancement. All these technologies taken together do not inevitably add up to the Internet. It is possible, perhaps even likely, that had the same technologies been available in an earlier time and under different circumstances, they would not have given rise to a system with the same characteristics. What is new and unique about the Internet, thoroughly in character with the temper of our times, and the source of its unprecedented productive capacities is its organization. Internet is primarily and preeminently a new model and form of social organization with untold power to transform the way society functions.

Even before Internet emerged as a worldwide phenomenon, the shift in computing from a specialized activity carried out in central data processing departments to an activity performed by millions of individual workers at their own workplaces and the linking of these separate computers into vast networks for exchanging information over long distances changed the way in which work was being carried out in businesses, universities and government. Even more significant was the organizational model selected by the U.S. Department of Defense. Rather than a hub of computers under centralized control, the system was designed so that every computer on the network could communicate, as a peer, with every other computer on the network. Thus, if part of the network were destroyed, the surviving parts would automatically reroute communications through different pathways. The result was the creation of a vast organization without central authority or hierarchy.

It is difficult to separate out the mental infrastructure that supported these physical and social components, because it is so closely intertwined with the other elements. Development of scientific and technological capacities and knowledge were obviously central. In addition, the spread of general education, computer literacy and skills have given rise to a society with the mental energy and capacity to readily accept and rapidly adopt this new medium to an infinite variety of uses. A psychological foundation was also essential. Surely a society that feared technology or a workforce that feared being replaced by computers would not have responded enthusiastically to the creation of an ubiquitous system that lends itself to so many possible applications. In actuality, although the system was developed by government and large organizations, its entry into the mainstream of the national life was almost entirely the result of the public’s ready and enthusiastic response and wholesale adoption of the new organization.

The very rapid development of the Internet in the West has only been possible because these four foundations have been built up and strengthened during the past few decades. The development of these infrastructures required the prior accumulation of huge surpluses of capital, mental energy and leisure time that could be made available by the society and channeled into the new activity. These surpluses are a product of the maturation of the vital stage of development, which generated the enormous growth of economic activity, productivity, capital accumulation, education and leisure in Western society.

Organizational Power of the Internet

From this perspective, the material circumstances and technological developments that made the emergence of this new organization possible appear less significant than the force that has guided their expression and the organizational structure that makes the Internet unique. It is impossible to predict the magnitude of the impact and all the ramifications of this new system on social development in the coming decades. But even after discounting the hyperbole generated by marketing firms and media coverage, it is clear that the Internet will and is already exercising a very profound influence on the development of the human community.

  1. It provides instantaneous access 24 hours a day from anywhere in the world to a growing wealth of information and knowledge that could soon rival that of all but the most sophisticated libraries and may eventually replace the library as a social institution. Immediate access to information will accelerate decision-making and action across a broad spectrum of activities.
  2. It provides a new medium for commercial transactions that in the USA alone could soon exceed in volume the $50 billion mail order industry. One result will be the weakening of national commercial boundaries and growth of world trade as companies gain easier access to overseas markets. Another will be a reduction in transaction costs by the elimination of some types of intermediate commercial agencies that have been necessary in the past to connect producers from ultimate consumers.
  3. The very low entry cost for setting up and advertising business activities on the Web helps to level the playing field between large and small firms and opens up a new frontier for entrepreneurship.
  4. It provides a medium for financial transactions that could radically transform the way securities are marketed.
  5. It provides a new medium for distance education that will transform the way educational institutions delivery knowledge and instruction, freeing education from the school the way money freed wealth from the land.
  6. It provides a very rapid, low cost means of personal communication between individuals located anywhere in the world, abridging the psychological distance and perceptual differences between societies.
  7. It provides a means for special interest groups to form instantaneously around any subject of common interest and act in unison over vast distances. One recent instance is the linking together of hundreds of small, independent specialty retailers and manufacturers in the USA to achieve economies of scale heretofore available only to mega-corporations.
  8. It offers a low-cost means for any person or group to publish and broadcast views to the world community, providing a practical mechanism for individuals to fully exercise their democratic right of free speech. Internet shifts power to the people.
  9. It provides a medium to offer the best available knowledge and expertise to everyone. Expert medical information on health problems and remedies can be delivered to millions of people on demand.
  10. It opens up the prospect that all citizens may soon be able to participate directly in a democratic system that is no longer determined more by the interests of politicians than by the views of the electorate.

Access to and use of the Internet is heavily concentrated in advanced industrial countries and urban centers today. It is primarily geared to provide the types of information and services sought after by the more educated and the wealthy. However, the Internet has the potential to powerfully influence the pace and direction of progress in less developing countries and regions as well.

  1. It already provides companies in developing countries with immediate access to a wide range of commercial and technical information that is otherwise slow, costly and difficult to obtain.
  2. These companies also acquire a low cost means to reach potential customers anywhere in the world.
  3. New industrial products and processes can now be monitored and examined electronically as soon as they are available.
  4. Reliable information and expert advice can be accessed from outlying areas. Access to the latest scientific information need no longer be restricted by budgetary constraints.
  5. Scientific knowledge and educational programs available on the Internet are equally accessible to people all over the globe. The development of the next generation of translation software will reduce language barriers as well.
  6. The establishment of low orbit satellite links will make it possible for low income countries to establish an alternative delivery system for information, broadcasting, telephone and fax services to vast rural populations.
  7. As the institution of money promoted the development of urban communities, the institution of Internet empowers people everywhere with equal access to information and services and provides a mechanism for maturation of global citizenship and a truly global community.

These are only a few of the most obvious areas in which the Internet will or is already transforming society. But the most profound impact is likely to be in intangible areas that are very difficult to quantify and measure. They can only be vaguely indicated by analogy with the impact of other institutions that have transformed social life, such as language and money. Language is an organized system of sounds and symbols that enables rapid and accurate communication of thoughts and sensations between people. Before language, the ability of two individuals to communicate was extremely cumbersome and limited. Social life was very primitive. Experience could not be shared with others, recorded or passed on to youth. Organized group activities were severely restricted by the inability to arrive at a common set of objectives, plan of action, division of labor, timeframe and agreed basis for sharing the results. The introduction of language made organized activities possible and with it the birth of developing societies and mature civilizations.

Money has played a similar role as the basis language for commerce. Before money, the ability of two individuals to interact economically was extremely cumbersome and limited. Money provides a common language in which economic goods and services, property and privileges can be expressed, valued and exchanged. The introduction of money has made possible the exponential growth of production, trade and consumption. Now Internet is establishing a common language and a readily accessible mechanism for the rapid exchange of information and ideas between virtually everyone who has access to the system. Development is a function of the velocity of social transactions. Money has immensely increased the speed of transactions. Internet is making many transactions instantaneous. Intellectually, this will exponentially increase the opportunities for exchange and dissemination of ideas and information for business, education, governance and research. The increased velocity and better quality of information, better because more current, will dramatically increase the speed and quality of decision-making. Practically, it will dramatically increase global access to goods and services.

In addition to speed and access, Internet also provides a mechanism for infinitely expanding the interactions between users and for customizing services to meet individual needs. Before Internet, the primary delivery systems for information have been one-to-one such as the telephone, fax and post, which like barter are limited by the need for a double coincidence, or one-to-many mass broadcasting systems such as newspapers, radio and television, which cannot discriminate between users or provide customized services. Internet makes many-to-many relationships a reality. By so doing it increases the potential number of interactions and transactions infinitely. It also enables either the source or recipient of information to control content and customize it to meet specific individual needs. As mass production has made more sophisticated products available to more people at lower cost, Internet will make customized and personalized services affordable and accessible.

Money increases energy in society and enables that energy to be utilized more efficiently. Before money, people had little incentive to produce more than they could consume. Money provides a means for individuals to save the fruits of their labor, store them indefinitely, transmute them into any form, transfer them to others or exchange them for any other social commodity. In so doing, money releases people’s energy and encourages them to work harder. Similarly, Internet allows the intellectual work of any individual to reach a far wider audience than is otherwise possible and to be more fully utilized by society. It releases mental energy, encourages mental creativity, and makes the results of creativity more widely available.

This new social system derives its unprecedented productive power from the same attributes that have made organizations effective since the dawn of society, but the similarity may not be immediately obvious. Organizations acquire power from their capacity to exercise authority and direct the energies of people. Internet is an organization without any discernable center of power or ability to direct anyone or anything. It is the first organization that anyone can access, but no one can own or control. Authority exists on the Internet, but it has been impersonalized and internalized. It is impersonalized in the form of strict technical standards, communication rules and language conventions to which all users must conform in order to participate in the organization. It has been internalized in the sense that usage of the system is strictly voluntary. The force that drives the growth of the system is the self-directed motivation of individuals and organizations to use it in the absence of any external compulsion. The enthusiastic interest that the Internet has evoked around the world is a measure of the determination of society to fully explore and exploit the potentials of this organization.

Organizations also derive power from systems, which we term the skills of society. The Internet is a very complex organization of systems for the generation, transmission, distribution, reception, and cataloging of information. As the Internet becomes a more common and accepted means of carrying out activities, it will equip society with an entirely new order of skills to raise productivity, increase convenience, improve quality and accelerate actions.

The power of an organization increases with its complexity, with its ability to coordinate and integrate a wider range of activities. Cities became centers of intense energy and high productivity by maximizing physical coordination between different activities concentrated in one location. Money derives much of its power from its ability to relate to every type of social activity, convert one into the other, and coordinate each with all the others. Internet has a parallel capability to cross-reference any subject and create meaningful linkages between previously unrelated topics. Every new social organization spreads gradually until it enters into relationship and integrates with every other social organization. The development of car travel has supported the growth of fast food, hotels, transport, commerce, industry, education, suburban communities, tourism and recreation. The development of television combines and integrates entertainment, educational programming, news, advertising, direct marketing, politics, sports and public service. Internet combines and integrates the functions of mail, telephone, fax, motion pictures, television, radio, newspapers, libraries, schools, conferences and discussion groups. It makes it possible to interrelate political, commercial, financial, educational, recreational, scientific, medical, religious, cultural and personal activities, stimulating the growth and increasing the productivity of them all. It creates the maximum number of potential synaptic connections between different subjects and activities.

Ultimately organizations derive their power from the values they embody and express. Although some people decry the absence of values on the Internet, by which they mean the lack of control over the suitability of content, the Internet actually embodies high and strong values from which it derives an almost irresistible strength. These include physical values such as speed, timeliness, efficiency and productivity; organizational values such as standardization, systemization, coordination, integration and communication; and psychological values such as equality of access, public service and empowerment of the individual.

As money empowers the individual with unlimited access to economic goods, Internet empowers the individual with unlimited access to knowledge. It enables a person to do what previously only an organization could accomplish. It makes people more competent and less dependent. It increases freedom of choice. It may soon bring a time when no book need ever go out of print and every student can choose his own teacher. Internet reduces the limitations imposed on humanity by space and time. It helps elevate people from the physical to the mental stage. As money has become a symbol of private property, individual acquisition and self-affirmation, the Internet is a symbol of our collective accomplishments, shared inheritance and human unity.


Some may argue that a theory which is so comprehensive and all-embracing may, by explaining the significance of everything, sacrifice the focus and precision needed to be practically useful. We disagree. On the contrary, we believe that the theory will help focus attention on precisely the right points for the analysis of policy options, because it calls first of all for determining the present status and preparedness of the society, the current direction given to its energies and aspiration, and the level of social organization and infrastructure presently available to support further development initiatives.

The theory is not a substitute or alternative to current economic theories of development. Rather than contradicting or diminishing the significance or utility of current theories, it can help place them in proper perspective and by so doing makes more precise the conditions under which their projections will be accurate and their prescriptions will be effective. In addition, the theory also provides fertile ground for the development of new specialized theories that reveal specific phenomenon in a wider social context. This may in some cases lead to conclusions at variance with the views resulting from a fragmentary analysis in a specific local context. For example, the significance of inflation in the context of social evolution is very different than the view that arises from explaining its immediate short-term causes and effects in the context of changes in monetary policy in an industrially advanced economy.

What are the Limits?

Regardless of the terms we use to measure it, the developmental achievements of the world over the past few millennia have been so enormous as to qualify for the epithet ‘infinite’. Global population, the crudest of measures, has multiplied 60,000 times since early man first took to cultivation. If we had adequate measures to reflect qualitative and well as quantitative improvements, we would find that the same order of magnitude is applicable to developments in the fields of agriculture, governance, commerce, production, technology, information, education and science. Coupled with the fact that the rate of global development has been and is still accelerating, does this permit us to conclude that the potential progress of humanity is without limits?

Faced with this prospect, even the most optimistic minds feel uncomfortable, for mind delights in the contemplation of finite possibilities and feels at sea in a field without boundaries. In defense, it calls forth age-old mental habits of skepticism and pessimism and quickly garners evidence and arguments to support a contrary conclusion. The most obvious is the fact that the highest level of accomplishments are presently enjoyed by only a small portion of the human race, leaving the vast majority of people at levels far below even the average level of human achievements – some even little better off than their primitive ancestors. The second is the common-sense argument that any attempt to extend today’s peak level of accomplishments to the rest of humanity would inflict an intolerable burden on the limited resources of the planet and the carrying capacity of the environment. A third is that in cataloging the achievements of modern society we cannot afford to overlook the serious problems that mitigate if not negate the benefits of development and that with further aggravation could prove overwhelming.

There is truth and merit in all these points, provided they are viewed in proper perspective. Early hunting tribes would have been fully justified in concluding that growth of world population beyond 10 million people would tax global game and fish reserves to the point of exhaustion and therefore was both undesirable and impractical, because they did not anticipate the development of cultivation and animal husbandry. Early agricultural communities would have been fully justified in concluding that the limited productivity of their cultivation methods and the limited amount of land placed severe restrictions on the growth of population beyond 300 million. They could not foresee the discovery of systematic crop rotation and sparsely populated, new continents of fertile soil capable of feeding a population ten times this number and, according to one estimate, as much as eight times the world’s current population. Residents of early cities with population densities exceeding by 50% the most densely populated urban areas in the modern world would have been justified in concluding that the squalor, limited water supplies, accumulation of pestilent sewage, and rampant spread of disease limited cities to a maximum of 100,000 residents. They could not envision the development of the sophisticated urban organization and infrastructure that now enable populations of more than 1000 times this size to enjoy modern amenities, good health and long life in large metropolitan areas of the most advanced industrial countries.

Every major social advancement seems to generate new problems equal or greater in magnitude than those that it overcomes. The agricultural technologies utilized to increase food production have given rise to depletion and contamination of soil and water resources. The medical technologies employed to reduce infant mortality and prolong life expectancy have given rise to the population explosion. The manufacturing technologies employed to meet the rising material expectations and demands of nearly six billion people have polluted the land, sky, rivers and oceans. Surely it is correct to assume that consumption of natural resources on the scale and with the intensity practiced by industrialized nations over the past five decades is unsustainable. New and improved methods must be found; new styles of life must be introduced. The physical pressure of a degraded environment and the economic pressure of rising fuel and material costs, as well as the political and social pressure generated by emerging populations will compel it. But these are precisely the types of pressures that humanity has faced in every earlier period of its development. They have spawned the intellectual, organizational and technological innovations that have brought the world to its current peak levels of achievement. The drastic reduction in pollution achieved by some industrial nations in response to insistent pressure from environmental groups over the past two decades illustrates this capacity. Dutch scientists have already proven that the amount of water required to produce one kilogram of vegetables is only 1.4 liters compared to actual current water consumption levels by the world’s farmers of 100 to 1000 times this amount. Israeli farmers routinely demonstrate vegetable yields 30 times higher per acre than the average achieved in many developing countries. Automobile manufacturers are already capable of producing commercial vehicles that generate almost zero air pollution. The visible pressure of overcrowded and polluted cities has given rise to greater awareness and growing concern, the mechanism which the collective will of society utilizes to compel alterations and improvements in human behavior.

But even if all the problems that threaten populations today or limit their further progress were removed, the human mind would still be left with a gnawing sense of dissatisfaction. This arises because the course of human development pursued up until now seems so fraught with waste, error, exaggeration, injustice and imperfection. No matter how resourcefully we have tackled the problems of the past, surely the blind stumbling method of social progress is doomed to reach or exceed tolerable limits sooner or later.

This argument would be quite compelling if humanity were forced to continue to rely on the methods that it has employed up to this time. Humankind has evolved over millennium by a long slow process of unconscious development. One of the central characteristics of this unconscious process is one-sidedness and imbalances. This arises out of the tendency of mind to divide and dissect every phenomenon into smaller and smaller parts and to formulate ways to deal with each of these parts separately with little or no comprehension of what ramifications these isolated actions will have on the health, stability and integrity of the whole. The initiation of unidimensional strategies arising from this tendency is the essential source of the problems that plague modern society -- population, pollution, poverty, crime and social isolation.

It would be naïve to assume that solutions to all present and future problems will be found in technology, unless we extend the meaning of the word beyond current usage to include the entire domain of know how which humanity applies to carry out the activities of its social existence. For we have been at pains to show that even in the past, the attribution of human progress primarily to advances in physical technologies is a facile assumption and inadequate explanation. Development is the process of organizational development, of which the development and application of mechanical technologies forms a significant expression. But the essential factor in that process is not technology, it is human beings. The progressive growth of human awareness and understanding, of the capacity for conception and organization, of the ability for skilled and coordinated execution, of the enjoyment of self-discovery of human potentials and self-expression of human resourcefulness in and through the collective social life are the essence of development.

The theory contends that humanity is entering a new stage of development in which the mental consciousness plays a far more powerful and determinative role. This has created the possibility and the opportunity for humanity to replace the slow and stumbling process of unconscious social development with a more conscious, rapid and integrated method that is free from the excesses, insufficiencies, frequent setbacks and dead ends that have characterized human progress until now. The essential prerequisites for this significant change include a thorough re-examination of humanity’s past experience and present activities from the perspective of a comprehensive theory of the development process. Once this is done, we could proceed with greater preparedness and confidence to ask ‘What are the limits?’

List of Principles

  1. Development is a process not a program. Development is not the result of a set of policies or programs. It is the result of a process by which society moves from lesser to greater levels of energy, efficiency, quality, productivity, complexity, comprehension, creativity, enjoyment and accomplishment.
  2. The process of development occurs by the creation of higher levels of organization in society capable of accomplishing greater acts with more efficient use of social energies. Society develops by organizing all the knowledge, human energies and material resources at its disposal to fulfill its aspirations. Organization is the practical application of knowledge in action. It is the technology or know-how for social accomplishment.

  3. Political, social, economic and technological development are various expressions and dimensions of the development of the human collective. The same principles of development are application to all fields of social existence.
  4. A society is prepared for development when it possesses the requisite surplus energy, awareness and aspiration.
  5. Surplus energy is the fuel for development. Each developmental achievement requires an enormous investment of energy in new and higher forms of behavior. Surplus energy is generated when society has fully organized and mastered activities at its current level of development. The development and application of mind energize society by technological and organizational innovation, spread of education, acceptance of new ideas and higher values.
  6. Energy is released when society becomes aware of new opportunities and has the collective will to exploit them. The driving force for development is the progressive growth of the social collectives’ knowledge and awareness of opportunities and the social aspiration or will for higher accomplishment.
  7. The social organization consists of a single interconnected fabric. The threads and the weave of the fabric are formed by the multidimensional interaction of social activities, organizations, institutions and values. The fabric varies in thickness and density of weave, being most concentrated in large, highly developed urban centers. Development is the process by which the fabric of the social organization increases in density, quality, complexity, and geographic extension.
  8. Society develops through the three overlapping stages – physical, vital, and mental. Each stage is characterized by the predominance of one of the three attributes of human consciousness. The progression from one stage to the next stimulates an exponential increase in the productivity and accomplishments of society.
  9. The natural process of development is unconscious. It proceeds by a slow, cumbersome, trial and error process from experience to knowledge. Conscious development moves in the other direction from knowledge to experience. The more conscious the process, the more rapid the progress. Education is an essential prerequisite for conscious development.
  10. The society gives formed creative expression to its collective subconscious urge for development through the initiative of pioneering individuals.
  11. The response of society to the initiative of the pioneer depends on its prior preparedness. Initiatives that are too far beyond the society’s preparedness are opposed, rejected or ignored. These pioneers are considered rebels. Those that embody the next step in the collective march are embraced, often after initial resistance, imitated and eventually accepted by the collective. These pioneers are accepted as leaders.
  12. Once a new activity is accepted, society established new organizations, policies and laws to support it. When social acceptance of the activity becomes complete, the activity matures into an institution that no longer requires the support of specialized organizations, policies and laws to promote it. At a further stage the activity is transmitted to future generations through the family and becomes part of the culture of the society.
  13. When society seeks to move to the next higher stage of development, existing beliefs, attitudes, behaviors and forms of organization become obstacles that have to be overcome in order for the transition to take place. Progression to each further stage involves a change in attitude and life style.
  14. The speed of social development increases as awareness of opportunities spreads, aspiration increases, conscious knowledge of organization grows, attitudes become more progressive, and infrastructure is put in place.
  15. Development takes place on the foundation of four types of infrastructure – physical, social, mental and psychological. Only the first of these is subject to any inherent limits. As development progresses, it relies more and more on non-material resources.
  16. Resources also are of four types – physical, social, mental and psychological.
  17. Mind is the creator of all resources. The application of human intelligence and inventiveness converts a substance into a resource. Increasing knowledge increases the productivity of resources, even physical resources. Therefore, mind is the ultimate resource that gives value to all the others.

All development reduces to the development of human beings. The continued growth in the capacity of human beings to conceive, design, plan, allocate, systematize, standardize, coordinate and integrate actions, systems, organizations and knowledge into larger, more complex and productive arrangements is responsible for the process of social development.


1. Garry Jacobs and Robert Macfarlane are research fellows at the International Center for Peace and Development in Napa, California, USA. N. Asokan is research associate at the Mother’s Service Society, Pondicherry, India.

2. Morris, Cynthia Taft and Adelman, Irma, Comparative Patterns of Economic Development 1850-1914, Johns Hopkins University Press.

3. Cited in Uncommon Opportunities: Agenda for Peace and Equitable Development, Zed Books, 1994.

4. The authors have documented the role of energy in growth of business organizations in two books, The Vital Difference (AMACOM, 1986) and The Vital Corporation (Prentice Hall, 1989).

5. The term ‘vital’ is used in this context to connote the intense life energy and dynamism that arise from relationships between people and the social activities and interactions that arise from those relationships.

6.  S. Lilley, Men, Machines and History, Lawrence and Wishart, London, 1965.