Development Theory I: Modernisation and Dependency

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Development Theory I Modernisation and Dependency
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Structure of the Lecture

• Section One Brief Historical Introduction
• Section Two Modernisation Theory
• Section Three Dependency Theory
• Section Four Capitalist Structuralism

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Historical Introduction

• For ideas of development economics or development
  theory to make sense it necessary to recognise
  difference between developing and developed
  societies
• In many respects both Marxists and liberals did
  not recognize differences in C19th and early C20th

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• For Marx Imperialism was about the export of
  capital
• The expansion of capitalism led to uniformity
• Not that different from liberal political economy
  
• Even critics of Imperialism (Hobson) saw it as
  developmental

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• Modern Development Economics was born in Latin
  America in the 1930s in response to world
  depression
• The main early contributions of Development
  economics come under heading of the
  structuralist school

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• The work of these early scholars was quickly
  dwarfed by contributions of US based liberal
  scholars in the early post-war period who sought
  to frame a comprehensive theory of development
  (Modernisation theory)
• Explicit ant-communist political agenda

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• 1960s (in wake of the Cuban revolution) formation
  of a radical explanation of underdevelopment

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Modernisation Theory

• Has cultural, political and economic component
• Different authors stress different aspects of the
  argument

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• Evolutionary Theory of Human History Third World
  Societies are less evolved than first world
  societies
• Policy framework to fight communism
• Parsons overtly uses biological metaphor

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• A number of levels of the analyse
• First and third world man are seen as different
  physiologically (Oscar Lewis and David McClelland
  ).
• First world man is individualist, rational and
  goal orientated.
• Third world man is collective, irrational and
  fatalist

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• Second, first and third world social systems are
  fundamentally different in terms of levels of
  evolution
• Parsons Ideas of evolutionary universals that
  all societies need to evolve beyond a particular
  level.

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• Basic Social stratification, Cultural
  Legitimating
• Advanced Bureaucratic Organisation, Money and
  the Market Complex, Generalised Universalistic
  Norms, and finally Democracy

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• Politically modernisation theorists did not
  simply promote liberal democracy
• Concerned with problems of transition (the
  confluence of the modern and the underdeveloped)
• Need mechanism of integration, depersonalisation,
  mediation and moderation to make democracy work

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• Order (anti-communism) most important
• Army appeared as a rational modern institution. A
  medium term political solution
• Pye, "Armies in the Process of Political
  Modernization
• Democracy ideal in long-term

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• Economic Theory of Modernisation
• Rostow and Stages (Traditional Society,
  Preconditions for take-off, Take off, Drive to
  Maturity, Mass Consumption)
• Values and ideas of traditional society are a
  problem
• After this rates of investment. . Invest 10-20
  per cent of national income.

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• Lewis. Dual Economy and Expanding Capitalist
  nucleus
• Two economies in underdeveloped state (capitalist
  and traditional)
• The key to achieving growth is expand capitalist
  sector

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• It is necessary to channel additional resources
  to the sector.
• Squeeze the peasantry
• Importantly there is no serious consideration of
  external constraints

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• Criticisms of Modernisation
• Tradition simply becomes a residual
  characteristic (not seriously analysed)
• Theory of evolution is crude
• You cannot simply ignore the structures of the
  global economy

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• You cannot simply ignore the structures of the
  global economy
• The economic solutions it proposes will
  exasperate poverty in the medium term
• Political solutions questionable?
• Does not properly delineate between different
  societies
• All cultural explanations of growth pose
  problem of hitting the target (Catholicism,
  Confucianism etc )

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Dependency Theory

• Marx turned on his head
• Focus on exchange than production
• Underdevelopment and development two sides of the
  same coin
• The idea of a traditional sector is nonsense
• The problem is how third world is integrated into
  the global economy

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• Frank
• Unequal Exchange All trade is monopolist an
  controlled by the centre for its over benefit
  (source of control changes). Same systems work
  internally (Major cities exploit the countryside)
  
• Lumpenbourgoise
• All development is simply the development of
  underdevelopment

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• The entire economy is thoroughly penetrated by
  global capital
• Although capital may lose interest in regions and
  periods of passive and active involution (Sub
  Saharan Africa example of passive involution)
• For Frank active involution has limits

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• The Amin variation
• Different explanation of Unequal Exchange Wages
  and Dynamic Advantage
• Excepts that there is pre-capitalist elements in
  the third world

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• However, these elements are penetrated by and
  their development is shaped by capitalism
• Some development is possible but only extraverted
  development auto centric development is
  impossible
• Thus for Amin (1973 292) there no direct
  correlation between underdevelopment and GDP.

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• Criticisms of Dependency
• Hopelessly ridged (particularly Frank)
• Insensitive to variations within the Third World
  (corrected by Cardoso)
• Degrees of dependency. It is not Black and White
• Belittles the real achievements of the third
  world (development of underdevelopment or
  extraverted development)
• What is equal exchange?

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• Economic Theory of Modernisation
• Lewis. Dual Economy and Expanding Capitalist
  nucleus
• Two economies in underdeveloped state (capitalist
  and traditional)
• The key to achieving growth is expand capitalist
  sector

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• It is necessary to channel additional resources
  to the sector.
• Squeeze the peasantry
• Importantly there is no serious consideration of
  external constraints

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Capitalist Structuralism

• We deal with this last because it represents a
  middle ground understanding of third world
  states interactions with the world economy
  (Furtado).
• It primarily theory devised by economists and is
  not necessarily a comprehensive theory of
  development

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• Some parallels with Lewis but differences
• More sensitivity to external (fact you are
  developing in relation to the developed)
• Terms of Trade
• Emphasis on the domestic market and third world
  common markets
• Primary focus on balance of payments rather than
  savings constraint

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• Policy Instruments
• Capitalist planning
• Trade barriers
• Moderate Wage Increases (expand markets and drive
  productivity)
• Tax the Rich not the peasants (the rich have a
  bad pattern of consumption)

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Conclusion

• Questions for You
• What do these two approaches agree upon?
• What can be salvaged?

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Class Exercise

• Election Fever
• There is a election in a middle income state (say
  Brazil).
• Divided into 3 groups (one representing
  modernisation, one dependency, one capitalist
  structuralism). Put forward a manifesto with main
  policies (and rational for these policies).
  Nominate a candidate who gave a brief election
  address.