Rostow chooses to tell the history of the world economy since the eighteenth century from five viewpoints. First, he offers the demographic transition; next he covers the various nations and their place in the overall picture of worldwide industrial growth. Third, he presents the 9 trend periods (185 years) as they affect leading sectors (food, raw materials, housing) and fourth, he reviews the business cycles as they highlight employment and output. Finally, he reviews the economies of 20 representative countries and offers policy advice to US politicians. Rostow is nothing if not thorough, nothing if not an optimist. His general thesis rests on two key ideas: first, the creative and unpredictable impulses and capital benefits embodied in technology must be directed through the economy by "correct" investment; that is, those who can invest, should see and choose to benefit in the technologies that are most likely to bring not only personal gain but also a higher standard of living for all. Second, to properly understand, evaluate, and make correct policy decisions, economists must view the sectors of the economy in a disaggregated fashion -- that is, in enough detail to see which sectors require investment. His approach might be called a dynamic disaggregated theory of optimal sectoral equilibrium.
Rostow begins by noting a single statistic that caused dismay among politicians in 1970: the off-the-charts rise in world population. He suggests that an 18th century population surge, combined with the industrial revolution and modern medicine, account for the rise. Only recently have populations in industrialized economies slowed, and Rostow (writing 15 years before the slow-down) notes that predictions about population are difficult, at best. He continues with an overview of the world-wide shift in population as it touches on industrial growth, and notes the same general price revolutions charted by David Hackett Fischer. He charts shifts in the relative price flow from distortions in the balance between the demands of industry and consumers and the supply of raw materials and food necessary to match them. "Societies are interacting phenomena," (p. 55) is a theme much canvassed, and key to his general notion of balanced and unbalanced growth.
In his third section Rostow looks at 9 trend periods. He is seeking the relationship between the relative abundance or scarcity of foodstuffs and raw materials and the character (?) of leading sectors in major economies as these affect population movements, housing construction, urban infrastructure. In general, (I gathered) when foodstuff prices are high, other sectors are depressed, as excess capital is absorbed by the price of food. Rostow offers detailed sectoral analyses during each trend, noting that war distorts relationships by encouraging manufacturing sectors while keeping food prices high. Also, disaster years for agriculture may create unexpected relationship between sectors. He notes that times of full employment combined with physical bottlenecks for raw material acquisition cause peaks, excess capital and resultant slumps. The fourth section of The World Economy focuses in on Rostow's particular interest in technology, and the lags or distortions in the economy which occur when investors turn away from optimum sectoral paths. Investors seek short-term profits, act as a "herd," and mis-apprehend the level of investment already placed in promising sectors. As a result, "the degree of sectoral overshooting in a boom helps determine not only its length but also the length and intensity of the subsequent slump." (310). The world as a whole is experiencing shorter and sharper cycles (as Fischer also avers). (As an aside, I would attribute that shortening cycle to a saturation in building and longer cycle sectors (in countries where the data can be gathered) and greater access to information about the upcoming demands in light industry and service in all countries.
Finally, Rostow describes and classifies 20 specific countries according to their progress on a "growth chart" (a chart, he notes, which has been debated by other economist-historians): take-off, a drive to technological maturity and a state of high mass-consumption. He notes that within a country, industries develop in groups, among the earliest food, leather goods and textiles; in the middle, rubber, wood, chemicals; and following last, clothing printing, metals, paper, metal products. From his survey, Rostow makes four conclusions: later-comers can catch up; India and China have special difficulties due to their overwhelming populations; it may be difficult to decide when "affluence" has been reached, and the leading growth sectors for the future are an open question. (personal computers were right around the corner!)
In 1973 Rostow suggested that the world together needed to address the following problems: bringing down birth rates, promoting enough agriculture to feed the population; finding renewable energy sources; controlling air and water pollution; managing the earth's raw materials; and correctly guiding investors to the sectors requiring capital. Each of these areas required not a "aggregate" approach, but a country-specific, industry-specific approach. In this "disaggregated" approach, he offered a complex anti-political message that was unlikely to win sloganeering adherents. He must have known so, but he was optimist enough to believe the world could be improved, and (given his time) it could be improved by the cooperation of the Western countries in opposition to the OPEC nations. Rostow closes with a quote from Walt Whitman; despite his optimism, one supposes he must have seen that there were many possibilities for the destination.
That in the Divine Ship, the World,
Breasting Time and Space,
All people of the globe together sail,
sail the same voyage,
Are bound to the same destination.