What explains the differential growth rates that foster international income inequality? The leading sociological answers have taken conflicting positions on the assumptions of self-interest and diminishing returns that are taken for granted in the neoclassical literature. While modernization theorists traced the periphery's inability to take advantage of diminishing returns in the core to “traditional” values that allegedly militated against savings, investment, and growth, and thus denied the universality of self-interest, their neo-Marxist successors traced underdevelopment less to the values of the poor than to the “cumulative” advantages of the rich, and thus denied the inevitability of diminishing returns. The result is a two-front assault that suffers from a serious coordination problem, and I therefore take issue with both the neoclassical accounts and their critics by, first, calling the validity of their assumptions—self-interest and diminishing returns—into question and, second, defending an alternative approach that treats the subordination of self-interest to norms of fairness, trust, and cooperation in the short run as the sine qua non of increasing returns and growth over the long run. The research challenge, therefore, is to unearth the roots of collaborative social norms in particular historical contexts—a challenge that will prove more tractable if development sociologists not only abandon the assumptions of self-interest and diminishing returns but embrace the tools and insights of the new economic sociology.

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