economic surplus

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economic surplus

the difference between what a country produces and what it consumes. This is a key concept in the work of the US Marxist economist, Paul Baran, and was developed by Baran and Paul Sweezy in their theory of MONOPOLY CAPITALISM (1966) and taken up by FRANK in UNDERDEVELOPMENT theory. Baran (1957) distinguished between three forms of economic surplus:
  1. actual economic surplus, which occurs in all societies, and is ‘the difference between society's actual current output and actual current consumption’. Thus, the surplus is accumulated in savings and investments;
  2. potential economic surplus, being the difference between what could be produced in a given environment and ‘what might be regarded as essential consumption’. This applies mainly to capitalist economies and is only realizable under reorganization of social arrangements. Economic surplus is lost because of excessive consumption, the existence of unproductive workers, poor organization of existing production processes and labour unemployment. In the THIRD WORLD, excessive consumption by élite groups eats up economic surplus, and in the monopoly capitalist countries, arms expenditure acts similarly;
  3. planned economic surplus, which applies to economic planning under socialism. (Baran's definition is, ‘the difference between society's “optimum” output obtainable in a historically given natural and technological environment under conditions of planned “optimal” utilization of all available productive resources, and some chosen “optimal” volume of consumption’.) This assumes both a completely efficient use of resources, and control over consumption such that decisions can be made to produce whatever economic surplus is desired.

Many problems have been identified with this usage. Baran recognized that there were problems with measurement, but, despite his optimism, these have not been resolved, so that the OPERATIONALIZATION of the concept remains problematic. It is especially unclear how potential economic surplus can be measured. The notion has an intuitive appeal, but quantifying this is probably impossible. His concept of planned economic surplus seems utopian in the light of the experience of existing socialist societies, whose planning has been associated with excessive wastage and inefficient usage of resources. Further, whilst Baran claims to build on Marxian concepts, the relationship of this concept to those of SURPLUS VALUE and the LABOUR THEORY OF VALUE are tenuous.

References in periodicals archive ?
The democratic, industrialized economies are in crisis because of the ways in which they are absorbing and/or falling to absorb their growing economic surpluses. They are also in crisis because of growing imbalances in their economies.
Similarly, dependency theory identified the lack of a domestic entrepreneurial class to turn economic surpluses into investments in a competitive manufacturing sector as a critical blockage sustaining distorted industrialization.
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Even with policies that favour smallholder production systems it is not clear that many smallholders can produce the economic surpluses that will enable them to improve their material wellbeing--they suffer from the crisis of raised expectations--they are aware of the material benefits of engagement in the market economy and small-scale agriculture is becoming less attractive as a way of life.
'The largest economic gains from investing in transport corridors may arise from urbanization and job creation around this new infrastructure, rather than from many more vehicles using it', said one of the report's authors, World Bank economist Martin Melecky, who added: 'not all corridor investments are equally successful in creating large economic surpluses that spread fairly throughout society.'
"The largest economic gains from investing in transport corridors may arise from urbanisation and job creation around this new infrastructure, rather than from many more vehicles using it," said one of the report's authors, World Bank economist Martin Melecky, who added: "not all corridor investments are equally successful in creating large economic surpluses that spread fairly throughout society." The report notes that many transport corridors proposed across Asia would cost trillions of dollars to implement, far exceeding the financing resources available.
And World Bank economist Martin Melecky added 'not all corridor investments are equally successful in creating large economic surpluses that spread fairly throughout society.'