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This article examines the neoclassical theory of economic growth through a comparative historical analysis of social development in Costa Rica and Chile in the post-1930 period. The neoclassical model underestimates the social and political sources of social development. Markets may create a dynamic and expanding economy, but growth will not automatically result in social infrastructure that will advance the social conditions of the majority. It is in this context that working-class mobilization is decisive for social development. As the Costa Rican and Chilean experience shows, a mobilized working-class can advance social development by forcing government actors to implement social policies in the attempt to either weaken the strength of labor or to buy labor's support. In either case, labor fulfills a critical role in establishing the statutory and bureaucratic precedents for advances in social development.