The Arthur Lewis Model

The last Sir Arthur Lewis of St. Lucia won the Nobel Prize for economics. Caroline Popovic look back at his ideas and his influence

Academic tributeDelivering the Dorab Tata Memorial Lectures in Bombay, 1973. Photograph courtesy Lady Gladys LewisIn St. Lucia for the 1988 graduation exercises of the Sir Arthur Lewis Community College; St. Lucia Prime Minister John Compton is at left next to Lady Gladys Lewis. Photograph courtesy Pearlette LouisyLewis deep in discussion with Princeton students. Photograph courtesy J. T. MillerMeeting Indian Prime Minsiter Jawaharlal NehruWith daughter Elizabeth and wife Gladys Taipei. Photograph courtesy Lady Gladys Lewis

Sir Arthur Lewis

In 1979, Sir Arthur Lewis of St Lucia won the Nobel Prize for Economics, sharing it with the American economist Theodore Schultz. Apart from the Nobel Peace Prize awarded to Martin Luther King 15 years earlier, he was the first black man ever to win a Nobel. In the Caribbean, only the French poet Saint-John Perse (born in Guadeloupe) had won one (for literature, in 1960).

Thirteen years later Derek Walcott, another St Lucian, won the island a second Nobel Prize, this time for literature. He and Lewis had been to the same school (St Mary’s College) and shared a birthday: January 23.

Lewis spent his professional life trying to improve the lot of former colonies as they struggled into independence and viability. He was a towering influence on his generation. The “Lewis Model” of economic development began influencing the Caribbean from the early 1950s, and set many of the economic patterns by which the region lives today. His “industrialisation by invitation” approach was most dramatically used in Puerto Rico and its “Operation Bootstrap” technique for economic expansion. Many of his ideas were successfully adapted in the fast-growing economies of the Far East. He was a tireless advocate of Caribbean unity, and there were few developing economies in Asia and Africa that did not receive his attention in one way or another.

His string of degrees and doctorates suggests something donnish and unapproachable. But his nephew Dr Vaughn Lewis, St Lucia’s new Prime Minister and for many years Director-General of the Organisation of Eastern Caribbean States, remembers him as down-to-earth, accessible, even humorous. “A lot of people knew them (Arthur and his brothers) when they were boys, and knew that they did not have a lot of privilege.”

William Arthur Lewis was born in 1915. His parents were Antiguan immigrants and teachers. The educational discipline in the Lewis household was rigid. “I don’t think it was peculiar to our family,” says Vaughn Lewis. “It was made clear to you from the beginning that you were supposed to perform adequately.” The Lewis boys did: two won national scholarships, two were knighted.

When Arthur fell ill at the age of seven, he stayed home for three months. His father, concerned that he would fall behind in his school work, taught him at home, and did such a thorough job that when Arthur returned to school he was shifted from grade 4 to grade 6; the rest of his school life was spent with older students. Having reached the top grade of the school early, he had to mark time for several years before winning a government scholarship to study overseas.

“This gave me a double sense of physical inferiority as well as an understanding which has remained with me ever since, that high marks are not everything,” Lewis later wrote.

His father died soon after, leaving his mother to raise five sons, ranging from five to 17, single-handedly. “My mother was the most highly disciplined and hardest working person I have ever known, and this, combined with her love and gentleness, enabled her to make a success of each of her children,” Lewis recalled. When boys at school bragged about the superiority of men over women, “I thought they were crazy.

Lewis wanted to be an engineer, but in the colonial society of the day neither the government nor white farmers hired black engineers. Instead, he went to the London School of Economics, where he graduated in 1937 with a first class degree in commerce. The school awarded him a full scholarship to do a Ph.D. in industrial economics; he joined the staff in 1938, still aged only 22, and remained there until 1947, the year in which he married Grenadian Gladys Jacobs, by whom he would have two daughters. The following year he became Stanley Jevons Professor of Political Economy at Manchester University, a post he held till 1957.

At the London School of Economics, Harold Laski had predicted great things for Arthur Lewis. He was right. They were to include the creation of a new branch of economics, a knighthood, the shaping of many of the world’s emerging economies, and a Nobel prize.

Although portraits of Arthur Lewis show him as a pillar of the establishment, his views were radical. It was an affiliation with the left-wing Fabian Society in London that led to the publication of one of his best-known books, The Principles of Economic Planning, which went through three editions and 11 impressions.

His first Fabian Society publication, however, had been a scorching pamphlet in 1938 entitled Labour in the West Indies, which focused on the distressing conditions of the West Indian masses. He was determined to reconnect the science of economics with the realities of life. In the late 1930s, workers in the West Indies took their protests onto the streets: agricultural strikes, hunger marches and general unrest caused serious concern in Britain.

For Lewis, the problems could be solved only by increasing the regions income and distributing it equitably. The islands needed low-interest loans to enable people to purchase land, redistribution of property and improved housing, health and education. “The British … are responsible for the presence in these islands of the majority of their inhabitants, whose ancestors have contributed millions to the wealth of Great Britain, a debt which has yet to be repaid,” Lewis wrote.

He also understood that little would change as long as the policy of the government was the policy of the local club, and matters of importance “were decided over a round of golf or a whisky and soda.” He wrote: “Vested interests in close alliance with the government have held unchallenged sway in these islands for 300 years, opposing not merely land settlement but any measure which in raising the standards of the masses would react unfavourably (from their point of view) on the level of wealth.”

A British report on West Indian problems recommended a strong focus on agriculture. Lewis disagreed. He preferred industrialisation based on local resources, and pointed out the different fates of those countries that had seized the chance to industrialise in the 19th century and those that had not.

In The Industrialisation of the West Indies (1950) and Economic Development with Unlimited Supplies of Labour (1954), Lewis proposed a dual-track approach: a small but expanding industrial sector paying modest wages, and a large agricultural sector paying subsistence wages. By keeping wages constant, the industrial sector would grow, surpluses would be re-invested, and excess labour would be soaked up from the agricultural sector. Slowly, living and economic standards would rise, and both the employment and food needs of growing populations would be met.

Further, since the Caribbean islands were short on capital and entrepreneurship, they would have to invite foreign investment through incentives and concessions. Because of their small market size, they would have to manufacture on a regional basis, with production geared to export markets.

In many ways, this is still the model that defines West Indian economic policy today.

“My interest in the subject of economic development was an offshoot of my anti-imperialism,” Lewis wrote later. So in England, his West Indian students, many of whom were already civil servants back home, were taught how economic theory related to Caribbean problems.

Internationally, Lewis lectured on the causes of the great depression and on international trade and relations. He worked as a consultant and advisor to a string of international agencies and governments — the Caribbean Commission, the United Nations Economic Commission for Asia and the Far East, the Gold Coast government, the government of Western Nigeria, and Kwame Nkrumah, Prime Minister of Ghana.

He became the guru of development economics. The Principles of Economic Planning was followed by The Theory of Economic Growth (1955). When Development Planning was published in 1966, it went to five impressions: reviewers rated it as “a do-it-yourself manual for developing countries, economists and civil servants — it could be one of the most important manuals ever.” The book, others said, was “way ahead of its time.”

In 1959 Lewis returned to the Caribbean to become the first West Indian Principal of the University College of the West Indies, soon to become the University of the West Indies (UWI). He served as UWI’s first West Indian Vice-Chancellor (1962-3) and later became its visiting Professor of Economics, teaching courses in development planning to undergraduate and graduate students.

By this time, his early radicalism had led him to a view of economic development which was seen by the younger generation as marked by compromise and conservatism. At a time when independence and nationhood were in the air, Lewis was insisting on the retention of a broad view rather than “cultural exclusivity”. At UWI for example he refused to hire West Indians who could not meet international standards of academic excellence — though he also insisted that the university staff should be 75% West Indian by the end of the sixties. He also helped to structure the new university in such a way as to make it difficult for any of the islands to withdraw. As Jamaica’s Rex Nettleford put it, “He bluntly advised realism in the place of manipulation of myths and a facile romanticism.”

But in many ways Lewis was swimming against the tide. He opposed the back-to-Africa movement fashionable in the 1970s, and the trend towards fragmentation among the islands. He opposed the American Black Power movement too. In a 1969 issue of the Princeton Quarterly, he suggested that the only way for America’s black minority to win the game was to “know whites so thoroughly that we can outpace them.” The suggestion that blacks turn their backs on whites and mingle only with black college students “is folly of the highest order. . . Our essential strategy is to use all the normal channels of advancement (in particular higher education) to climb the ladder.” The idea that black America would be saved by the emergence of black agitation, he said, was a hoax.

In a 1971 address to UWI graduates, he said that Africans were having as big an identity crisis as West Indians, and it was no good trying to base a  new West Indian identity on old African roots. “We must make something different … our achievement must be unique.”

Lewis also criticised the West Indian personality, which he attributed to insecure family life in which most children were reared. He warned: “Our aggressive personality makes us inferior. We are spendthrift and not very reliable in keeping our commitments punctually, and if we continue to be unbusinesslike, our society will have no long-term future, since it will not survive in this Darwinian world.”

A new breed of West Indian, Lewis thought, needed a creative arts curriculum in secondary schools. “A society without the creative arts is a cultural desert,” he declared. West Indians had to be open to the outside world and its agenda. “If we are going to close our minds in a box of our pure West Indianness, we shall achieve nothing worthwhile.”

It is easy to see how Lewis arrived at these opinions, and how unpopular they would be. Looking back on all this at a UWI graduation address some years later, Lewis reflected that men like himself were derogatorily called “Afro-Saxons”, black men who held on to the styles and values of a colonial culture. But he saw the name as a compliment: for him, it meant a black man holding his ground in competition with white people on their ground.

Lewis remained in the Caribbean for only four years before taking up a professorship at Princeton in the United States in 1963. But those years coincided with the region’s abortive experiment with federation, a process close to Lewis’s heart; its failure must have been traumatic for him.

The idea was probably doomed from the start. Sir Fred Phillips, the Federation’s Cabinet Secretary, wrote in his book Caribbean Life And Culture that the Federal constitution was “little more than the kind of instrument which had traditionally been given to a crown colony.” The Governor-General, Lord Haines, was “not sufficiently progressive and not sufficiently conversant with the Caribbean scene to handle or understand men like Eric Williams and Norman Manley.”

As each island realised it could get self-government on its own, the Federation became an obstacle. In addition, there was friction among the leaders in Jamaica, Barbados and Trinidad.

Then, just before the Jamaica referendum in 1961 on future participation in the Federation, the British Secretary of State for the Colonies promised that if Jamaicans voted no, the island would be granted independence. Jamaica voted no.

In his slim booklet The Agony of the Eight, Arthur Lewis, in a rare public outburst, lashed out at those who had caused the Federation’s failure and detailed the events that led to the union’s collapse. But he still persuaded Eric Williams that the Federation could work without Jamaica, and asked for time to sell the idea to the other islands. He noted drily: “I was in the position of a salesman taking orders for a product which the company had already discontinued.”

Even that did not work. Lewis’s upbeat report was thrown out by Eric Williams’s Cabinet and party convention. Trinidad and Tobago was to pursue its own independence. The federal idea dragged on for some years, but by 1965 Barbados too had given up on it, and decided to opt for independence too. That was the end of it. “If each little island goes off on its own, its people must suffer,” Lewis warned.

Yet Lewis maintained that federation was the only hope for Caribbean prosperity. The islands needed it to develop export markets and to secure prices for their goods, for tourism, higher education, shipping, aviation, customs unions, currency research, traditional standards and international relations. “These islands are too small for attention by the World Bank and the United States aid agencies and other sources of international aid,” he wrote. “In the West Indies, as anywhere else, booms tend to vanish as rapidly as they come. A wise government looks ahead to see who will befriend it when lean times come again.”

Federation was also crucial to competent administration, he argued. “Civil servants are too subject to the whims of political leaders, and the civil service commission too subservient to the party in power. The problem is at its worst in the Windward and Leeward islands. A small island falls easily under the power of a boss who intimidates the polls, newspapers, private employers and merchants. The road is open to persecution and corruption. The West Indies needs a federation as the ultimate guardian of political freedom.”

In the early 1970s, Arthur Lewis was the first president of the Caribbean Development Bank which he helped to found in Barbados in 1970. But basically he worked in America until his retirement in 1983, the same year he was made President of the American Economics Association. Development Planning appeared in 1966, Reflections on Economic Growth in West Africa in 1968, Some Aspects of Economic Development in 1969, Tropical Development 1880-1913 in 1971, Evolution of the International Economic Order in 1977, and Growth and Fluctuations 1870-1913 in 1978. His academic standing was recognised by honorary doctorates from the Universities of Toronto, Columbia, Dakar, Bristol, Rutgers, Manchester, Lagos and the West Indies.

Today, his central ideas are hotly debated. The Caribbean is still discussing the virtues of unity against the urge towards separation. Lewis’s influence was enormous, but the reaction against it has also been strong. For many critics, the “Lewis Model” has led to a new form of dependency and fragmentation. Susan Craig, for example, a Tobago-born lecturer in sociology at the University of the West Indies, has written that while his books on economic planning were among the classics of development economics and his strategy for development underpinned the ideology of democratic politics in the English-speaking Caribbean after 1945, he had “underestimated the means of the multinational corporation as the investing unit.”

That is a common criticism — that Lewis naively assumed that multinational corporations invited into developing economies would reinvest their profits and transfer their technology, instead of exploiting the cheap labour, exporting their profits and moving on.

Against that, it is worth remembering that Lewis saw “industrialisation by invitation” as a road to self-reliance, and that the model also assumed customs union and political integration. At a 1957 conference, he declared: “This opinion that the West Indies can raise all the capital it needs from its own resources is bound to shock many people, because West Indians like to feel that ours is a poor community. But at least half of the people in the world are poorer than we are … It is not necessary to send our statesmen around the world begging for help. If help is given, let us accept it, but let us not say that nothing can be done until the rest of the world grants us charity.”

Many critics accuse Lewis of being out of touch with Caribbean realities, and cite his failure to grasp the Caribbean’s musical genius. The Trinidad economist Lloyd Best noted: “Although Sir Arthur was a fully committed West Indian and a paragon of industry . . . probably the best of his times, eminently suited to speak for the rest of us . . . his tragedy and ours was that he did not sufficiently understand our needs.” Pointing out that the most serious film to come out of the Caribbean was The Harder They Come, a Jamaican movie about the struggle to make music, Susan Craig charged: “The economist with his gaze fixed on Europe must of necessity find such expression backward.” Lewis had failed to understand the search for roots of young blacks in the Caribbean: he was “wedded to discipline, productivity, capital and advancement for the talented tenth of the race. He was the leading ideologue of his class and of imperialism at the crucial periods in the formation of the modern Caribbean.”

Perhaps in time this acid view of Lewis will reconnect with the man who frequently stated his opposition to imperialism and to Anglo-American-style democracy in which the winner takes all, which he said was “immoral” and “ill-adapted to fissure-riddled Third World environments.” After studying the plural societies of Africa and the Caribbean, Lewis was convinced that functional democracy had to incorporate divergent interests through coalition and compromise to avoid domination by a single group. “It is necessary to get right away from the idea that somebody has to prevail over somebody else: from politics as a zero-sum game. Words like winning and losing have to be banished from the vocabulary of a plural society.”

At home, recognition of Arthur Lewis’s achievements came towards the end of his life, when the St Lucia government united its higher education institutions into one body and called it the Sir Arthur Lewis Community College. After he retired, Sir Arthur attended the college’s graduation ceremonies regularly until his death in 1991.

“He was quite gratified,” Vaughn Lewis noted. “There was a view that he had not given himself to St Lucia and this was some element of recognition from his own community.”

In 1992, the staff of the College gathered at work to watch Derek Walcott on television receiving his Nobel prize from the Swedish monarch in Stockholm. In the midst of the proceedings, a few staff members slipped out of the room. They made their way to Sir Arthur Lewis’s tomb, a black monument on the College campus, engraved with gold lettering.

To include St Lucia’s first Nobel prizewinner in the festivities of the day, they poured a champagne libation onto the shiny black stone.