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Modernization, dependency and development

This chapter examines the rise and fall of development theory since 1945. The first section examines the dominant discourse in develop- ment theory from the 1950s to the late 1960s, namely modernization theory. This section also includes an extension of the discussion of the previous chapter, and a brief reassessment of Marxist "moderniza- tion" theory. The second section examines alternatives to moderniza- tion theory and orthodox Marxism, namely underdevelopment, dependency and world systems theories. An assessment is then made, and in the third section I reintroduce one (orthodox) Marxist alterna- tive to these theories, associated chiefly with the work of Bill Warren. In my conclusion I argue that there is a common thread in all these works, based on "developmentalism", which is best described as a post-war version of evolutionary theory.

Modernization theory

The theory in context: The Third World and development economics

Modernization theory arose in the historical context of the end of the European and Japanese empires and the beginning of the Cold War. It was in this context that the term "Third World" was first used by the independent left in France to describe a "third way" or "third path" between capitalism and communism (Thomas 1983, Worsley 1964, 1984). This notion was taken up by Third World leaders such as Nehru, Nasser and Sukharno, and they began to form organizations that challenged the primacy in the global order of the East-West con-

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flict. The Non-Aligned Movement in particular argued for a political path in the Third World independent of the two superpowers. In challenging this perception, these leaders began to utilize the term Third World in a second sense, describing the inequalities in wealth and power between the rich North and poor South. In 1964, the United Nations Conference on Trade and Development (UNCTAD) was formed to challenge the inequities of the global order (Hoogvelt 1982: 74-80, Rajamoorthy 1993).

In many respects, non-alignment and the critique of the North- South divide were inspirations for at least some versions of depend- ency theory. The focus on the structural inequalities of the world sys- tem led to demands for controls on the behaviour of Western transnational companies and demands for fairer trading relations be- tween North and South, which culminated in the mid-1970s' votes at the United Nations for a "new international economic order" (Anell & Nygren 1980: 187-209). Nevertheless, in the 1950s and 1960s these principles were in some ways compatible with modernization theory, despite some clear differences. This was the case for three rea- sons: first, non-alignment was often rhetorical from the start, and, in practice, by the 1980s most Third World countries openly associated themselves with one or the other superpower (Worsley 1984: 324-5, Halliday 1989: 21-2); secondly, both the Third World and moderni- zation theory believed that the best way to achieve "modernity" was through economic growth, and especially industrialization; and thirdly, both perspectives criticized the neoclassical theory of interna- tional trade.

Modernization theory was comparatively moderate and far less critical of the global order than "structuralist" development econom- ics. A leading structuralist economist, Raul Prebisch (1959: 261-4), argued that there was a tendency for the terms of trade of primary producers (concentrated in the Third World) to decline against manufacturing producers (concentrated in the First World). This fo- cus on the international system was a great influence on dependency theory, and many dependency writers in the 1960s and 1970s came out of the United Nations Economic Commission on Latin America (ECLA) , where Prebisch had previously worked. However, in the 1950s and early 1960s, his views were compatible with moderniza- tion theory because both schools accepted the strategy of economic growth through industrialization. For Pre bisch, this was the best way

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for Third World countries to combat the tendency of their terms of trade to decline. For modernization theory, industrialization was the route for Third World countries to become modern. Both structural- ism and modernization theory at least implicitly agreed that foreign capital would have to play the leading role in the early stages of indus- trialization (see Rostow 1971: 180, Lewis 1950: 38). This emphasis on industrialization represented a critique (albeit an implicit and lim- ited one in the case of modernization theory) of the neoclassical theory of comparative advantage, whereby countries specialize in producing those goods in which they are most efficient, and then trade openly on the world market with the products of other coun- tries' comparative advantages (see Ricardo 1971: 133-41, Ohlin 1933). Industrial development in the periphery meant the promotion of the production of goods that the Third World, initially at least, could not produce most efficiently or cheaply. In practice, this meant that industrial development was promoted on the basis of the protec- tion of domestic industry from foreign competition, via a process of "import substitution" (Lewis 1950, Prebisch 1959, and, from within the modernization school, see Moore 1963: 97).

So, to summarize: modernization theory arose in the context of the rise of newly independent states and the Cold War between the capi- talist and communist worlds. Although far more moderate than struc- turalist development economics, it shared some of its assumptions and most of the same strategic goals, particularly modernization through industrialization.

Modernization theory explained

The theory of modernization was an attempt by mainly First World scholars to explain the social reality of the "new states" of the Third World. The attainment of a modern society was seen as the strategic goal for these new nations, and this was defined as a social system based on achievement, universalism and individualism (Parsons et al. 1962: 76-88, see also Almond & Coleman 1960: 532-3). The mod- ern, Western world of social mobility, equal opportunity, the rule of law and individual freedom was contrasted with traditional societies, which were based on ascribed status, hierarchy and personalized so- cial relations. The purpose of modernization theory was to explain, and promote, the transition from traditional to modern society.

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Modernization theory argued that this transition should be re- garded as a process of traditional societies "catching up" with the modern world. As Moore (1963: 89) argued:

What is involved in modernization is a "total" transformation of a traditional or pre-modern society into the types of technology and associated social organization that characterize the "advanced", economically prosperous, and relatively politically stable nations of the western world.

The social psychologist David McClelland (1961: 430) similarly argued that the solution to backwardness was to educate the tradi- tionalists on the virtues of the Western world, but he placed more em- phasis on the role of Western ideas. However, modernization theory was most clearly elaborated by Walt Rostow (1960: 4-16), who ar- gued that there were five stages of development through which all so- cieties passed. These were:

(i) the traditional stage; (ii) the preconditions for take-off;

(iii) take-off; (iv) the drive to maturity; (v) high mass consumption. Third World societies were regarded as traditional, and so needed

to develop to the second stage, and thus establish the preconditions for take-off. Rostow described these preconditions as the develop- ment of trade, the beginnings of rational, scientific ideas, and the emergence of an elite that reinvests rather than squanders its wealth (ibid.: 17-35). The theory argued that this process could be speeded up by the encouragement and diffusion of Western investment and ideas (Moore 1965: 10, Rostow 1971: 180).

Writers in this tradition also argued that industrialization would promote Western ideas of individualism, equality of opportunity and shared values, which in turn would reduce social unrest and class con- flict (Kerr et al. 1962: chs 1 & 2). They argued that a similar process would occur in the Second World, too, as it developed through indus- trial growth (ibid.). This was because "a commercial-industrial sys- tem imposes certain organizational and institutional requirements not only on the economy but also on many other aspects of society" (Moore 1965: 11-12). It was therefore argued that modernization

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would promote convergence between the "three worlds". Modernization theory was, therefore, an altogether more conserva-

tive theory than structuralist economics, even though it shared similar strategic goals. Indeed, given the Cold War context in which the theo- ry was devised, it is at times unclear whether modernization theory was an analytical or prescriptive device, and it left a number of unan- swered questions. For instance, the theory was unclear on the ques- tion of whether modernization was actually occurring or whether it should occur. It was also unclear as to the motives of those promoting modernization: was it to relieve poverty or to provide a bulwark against communism? Obviously the two factors are connected, but the subtitle of Rostow's classic ("a non-communist manifesto") sug- gests that the latter may have been considered more important than the former. I return to these questions in the critique below. For now, it should be clear that modernization theory was based on an evolu- tionary model of development, whereby all nation-states passed through broadly similar stages of development. In the context of the post-war world, it was considered imperative that the modern West should help to promote the transition to modernity in the traditional Third World.

Orthodox Marxism and modernization

"Orthodox" Marxism, as discussed in the previous chapter, shared an evolutionary, "stagist", approach to development. The previous chapter examined and criticized this theory, but I briefly return to it here to outline the history of orthodox Marxism and emphasize its similarities with modernization theory. It was shown in the previous chapter that, although in some respects Bolshevism challenged the historical materialism of the Second International, in other respects it replicated it. The Bolshevik seizure of power in 1917 was a challenge to the prevailing orthodoxy that the Russian social order was not "ripe" for socialist revolution, but, once in power, the Bolsheviks used the state to develop the productive forces. Socialism was defined less by its ability to emancipate labour and more by its ability to de- velop labour productivity more efficiently than capitalism. It was therefore seen as a different means to achieve the "modern" end of an industrial society based on mass production, and so was compatible with orthodox historical materialism, which saw history as the devel-

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opment of the productive forces. As early as 1918 Lenin wrote (1977: 248) that "socialism calls for a

conscious mass advance to greater productivity of labour compared with capitalism and on the basis achieved by capitalism. Socialism must achieve this advance in its own way ... by Soviet methods. And the specialists ... are, in the main, inevitably bourgeois." It was not surprising, therefore, that the ruling Communist Party was willing to utilize certain features of work organization in capitalist societies, es- pecially the managerial strategy of Taylorism (see Littler 1984). After Lenin's death, the evolutionary version of historical materialism be- came official Soviet state dogma. Stalin wrote that "First the produc- tive forces of society change and develop, and then, depending on these changes and in conformity with them, men's relations of pro- duction, their economic relations, change" (Stalin 1976: 859). On this basis, he identified "the laws of development of society" (ibid.: 848), in which nations pass through five stages of history: primitive communism, slavery, feudalism, capitalism and communism (ibid.: 862).

Later Soviet writers more or less repeated these statements (see the previous chapter) and largely glossed over the tensions in the work of Marx. For example, when the letters to Zasulich were discovered (see previous chapter), they were explained away by references to Marx's age and declining intellectual capacities (see Shanin 1984: 18-19). In terms of the post-war underdeveloped world, developments in Soviet Marxism did not stray far from the original paradigm of the primacy of the productive forces. The "non-capitalist path of development" was championed as a stage of development for Third World countries that would create "the material prerequisites ... to the future socialist reconstruction of the economy" (Solodovnikov, cited in Lowy 1981: 197). Egypt, Somalia and Guinea, among others, were given Soviet support for their promotion of the "prerequisites for socialism", de- spite the fact that they were clearly capitalist societies. Although this theoretical development is obviously closely tied to the Cold War, the Soviet Union again "justified" the theory on the basis of the states' promotion of the productive forces (although this was hardly success- ful in some cases) (for a critique, see Thomas 1977).

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Modernization theory assessed

Modernization theory has been subject to rigorous criticism by many writers (see Frank 1966, 1969a, 1969b, Bernstein 1971, Leys 1982, Webster 1990: 56-62, Spybey 1992: chs 1 & 2), although this has not prevented a partial revival of the theory, albeit in a different, often ex- plicitly neoclassical form (see Little 1981: 25, La11983: 45-7, Berger 1986, Fukuyama 1992). This revival is examined in later chapters. For now, the many criticisms that have been made of the theory will be reviewed. However, before doing so, I want to make a point that will become clearer in later chapters. While accepting much of the force of the criticisms made of this theory, I do not object to some of the key categories of the modernization school. My objections to modernization theory lie not with the concepts of "progress" or "mo- dernity", but with the way that these concepts are employed. In other words, these concepts are useful if used in a flexible and non-evolu- tionary way. Indeed, without such concepts there could be no meas- ure of whether a particular kind of development is desirable or not (see further, Chapter 7).

The basic problem with modernization theory is that it assumes that there is an unproblematic transition from traditional society to modernity. The cause of this transition is either Western individual- ism (entrepreneurship) or Western technology (the industrial soci- ety), or a mixture of these two factors. The problem with this approach is that the two factors are taken in isolation from the par- ticular social structure in which they are embedded. Technology does not determine the social structure; rather it is the social structure that influences technology. This can be seen empirically through a com- parison of different "industrial societies", which may utilize similar levels of technology but have radically different social and political structures (although this is not to deny some similarities as well). One could compare Japan, France and Britain, all relatively "advanced" industrial (or even "post-industrial") societies, but all with different forms of work organization, trade union structure, cultural relations and, to some extent, political systems (see Gallie 1983). In so far as there are similarities, these cannot be explained by the "determining role" of technology; instead, one would have to examine the specific social and political history of each country.

Such a technological determinism also leads to a rather naIve analy-

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sis of the reality of technologically advanced countries. The assump- tion that the USA was a modern meritocracy in the 1960s seems hope- lessly wide of the mark when one considers the "racial" and ethnic antagonisms that existed at that time, and that still exist. It is simply a fantasy to assume that racial prejudice is a product of traditional antagonisms, which is bound to disappear through the modernizing drive of mass technology. Instead, what is required is a careful analy- sis of the history of so-called "race relations" in the United States, and therefore a far more balanced analysis of the tradition-modern di- chotomy than modernization and convergence theories allow. In so doing, it might prove the case that "modernity" creates conflict, just as much as it may destroy it.

This point can be seen if one examines the Green Revolution in In- dia in the 1960s. The aim of this revolution in agriculture was to in- crease agricultural productivity through a technological package which, it was assumed, would benefit all farmers. The result was an increase in productivity and output, but at the expense of increasing differentiation among the peasantry (see Desai 1975: 25-8, Byres & Crow 1988: 177-81, Byres 1989: 53-8). Harriss (1987: 237-8) has described why this differentiation occurred:

those with more resources are able to make better use of the pack- age than the small producers ... [and] conditions are thereby cre- ated which are even more unfavourable to small producers (because the success of the relatively well off makes it more diffi- cult for poorer cultivators to obtain labour, credit or fertilizers).

What this passage makes clear is that the enrichment of some, and impoverishment of others, occurred because technology was diffused into a highly unequal social structure, and so access to the technology was itself highly unequal. The result was an intensification, rather than alleviation, of inequality. Once again, this example shows that conflict may increase, rather than diminish, with the onset of "mod- ernization".

Modernization theory conceptualizes the relationship between modernity and the world system in an equally naive way. In so far as the theory examines relationships between different regions of the world, it assumes that these are based on a consensus and shared val- ues, rather than on unequal power relations or conflict. Obstacles to

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modernity exist within a nation-state, not beyond it. But this thesis is based on a complete separation, or dualism, between "traditional" nations and the modern global order. As Frank (1969b: 62) has ar- gued, such theories "are inadequate because the supposed structural duality is contrary to both historical and contemporary reality: the entire social fabric of the underdeveloped countries has long since been penetrated and transformed by, and integrated into, the world embracing system of which it is an integral part".

Modernization theory therefore separates the modern interna- tional division of labour from "traditional" nation-states, and fails to clarify the mechanisms by which the latter were integrated into the former. So, for example, New World slavery should not in any sense be regarded as "traditional" because it was the product of the will of specifically modern powers (E. Williams 1987). This example again suggests that the reality of modernity is far more complex, and con- flict ridden, than modernization theory allows. In peripheral societies today, such conflict may rest on a "dualism" not only between First and Third World, but also within Third World societies themselves. For example, so-called modern sectors may exploit so-called tradi- tional sectors through access to cheap labour or raw materials pro- duced in the latter.

Modernization theory therefore rests on the assumptions of a con- flict-free modern world, a rigid dichotomy between tradition and modernity, and an unproblematic transition from one to the other. It is the third of these problems that is the central weakness of orthodox Marxism, which rests on a view of history whereby the productive forces develop, and relations of production evolve, according to their functionality to the continued development of the productive forces. The problem with this thesis, as I have already argued, is that it as- sumes that the class that can best develop the productive forces has the capacity to change the mode of production to ensure the contin- ued development of the productive forces (see Levine & Wright 1980: 66). Both theories therefore share a technological determinism that fails to locate technology in a particular social structure (or, if one prefers, the relations of production).

It is ironic then, given the Cold War context in which they oper- ated, that modernization theory and orthodox Marxism actually shared similar evolutionary assumptions. It may be true that both ver- sions of modernization theory were more important as justifications

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for respective superpower interventions in the periphery, rather than the actual coherence of the theories themselves. Nevertheless, con- clusions such as this can be drawn only after, and not prior to, analy- sis of the logical consistency of a particular theory. Both were criticized on these grounds by an alternative school of thought, which developed in the late 1960s and to which I now turn.

Underdevelopment and dependency theory

Underdevelopment and world systems theory

This school of thought is associated with the work of Andre Gunder Frank, but the influence of Paul Baran's work (1957) is also very im- portant. He argued that the economic relationships that existed be- tween western Europe (and later Japan and the United States) and the rest of the world were based on conflict and exploitation. The former took part in "outright plunder or in plunder thinly veiled as trade, seizing and removing tremendous wealth from the place of their pen- etration" (Baran 1957: 141-2). The result was a transfer of wealth from the latter to the former (ibid.: 22-4).

Baran's work is more complex than this but it was his theory of sur- plus transfer that most influenced Frank. Frank criticized the dualist thesis (see above), which isolated "modern" and "traditional" states, and argued that the two were closely linked. He applied his critique to both modernization theory and orthodox Marxism (1969b: 238), and instead argued, contrary to Baran, that the world had been capi- talist since the sixteenth century (Frank 1969a: 14-15, for Baran's position, see Baran 1957: 164). The colonial period was character- ized by the placing of regions into "a situation of growing subjection and economic dependence, both colonial and neo-colonial, in the sin- gle world system of expanding commercial capitalism" (Frank 1972: 13).

Frank argues that the capitalist world is based on a chain of metropolis-satellite relations, divided by nations and regions within nations. The metropoles exploit the satellites through the expropria- tion of economic surplus, which the former use for their own eco- nomic development. The satellites, meanwhile, "remain underdevel- oped for the lack of access to their own surplus" (Frank 1969a: 9). The dualism of modernization theory and orthodox Marxism is re-

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placed by a theory that argues that the world has been capitalist since the sixteenth century, and this is because all sectors are drawn into the world system, based on production for the market. The result is that some nations develop at the expense of others; as Frank (1969a: 240) argues, "[t]his capitalist system has at all times and in all places - as in its nature it must - produced both development and underdevelop- ment. The one is as much the product of the system, is just as 'capital- ist' as the other."

Frank's central argument is therefore quite simple. Modernization theory and orthodox Marxism counterposed the modern world to the traditional world, and gave their support to those that promoted the modern, but in fact it is actually these "modernists" that have cre- ated the "traditional" world. "Traditional" sectors - or satellites - are as much a feature of the world system as "modern" ones - or metro- poles. Metropoles exploit the satellites by expropriating their sur- plus, and so the two sectors must not be seen in isolation, but are in fact part of the same structured whole.

Wallerstein developed this idea of the world capitalist economy in his "world system analysis". His basic argument was that the creation of the world capitalist economy in the sixteenth century led to a new period of history, based on expanded accumulation rather than stag- nant consumption. This was attributable to the emergence of three key factors:

an expansion of the geographical size of the world in question (in- corporation), the development of variegated methods of labour control for different products and different zones of the world economy (specialisation) and the creation of relatively strong state machineries in what would be the core states of this capitalist world economy (to assure transfer of surplus to the core). (Wallerstein 1974: 7)

According to Wallerstein then, the growth of trade, the more effi- cient organization of production, and a structure of unequal nation- states led to the creation of the world capitalist economy. This in turn led to an unprecedented expansion of the productive forces, but at the expense of the periphery (Frank's satellites) and to the benefit of the core (Frank's metropoles).

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Further developments - unequal exchange and dependency theory

The work of Arghiri Emmanuel and Samir Amin complemented that of Frank and Wallerstein because they attempted to clarify some of the mechanisms whereby surplus was transferred to the core from the periphery. Their respective work has been summarized and criticized elsewhere (Bettelheim 1972, Pilling 1973, Brewer 1980), so I will be brief. Emmanuel's theory (1972) is very similar to Raul Prebisch's in that he argues that surplus is transferred to the core from the periph- ery through a process of unequal exchange. He assumes that the rate of surplus value expropriated by capital is greater in the periphery than in the core, but that there is also an equalization of the rate of profit in the world economy. This leads to a transfer of surplus value from the Third World to the First World.

In essence then, Emmanuel is arguing that wage discrepancies be- tween workers in core and periphery lead to a process of unequal ex- change and surplus transfer (1972: 43). Amin (1976: 288) essentially concurs with this analysis, although his analysis also examines the ways in which the periphery's incorporation into the world economy led to its "extroverted" or "export-oriented" accumulation. Accord- ing to Amin (1976: 288), the dominance of the periphery by the cen- tre promotes three key distortions in the former:

(1) a crucial distortion toward export activities, which absorb the major part of the capital arriving from the centre;

(2) a distortion toward tertiary activities, which arises both from the special contradictions of peripheral capitalism and from the original structures of the peripheral formations; and

(3) a distortion in the choice of branches of industry, toward light branches, together with the utilisation of modern techniques in these branches.

This pattern of export activity leads to a vicious circle of underdevel- opment, which led Amin (1976: 13) to conclude that "so long as an underdeveloped country continues to be integrated in the world mar- ket, it remains helpless ... the possibilities of local accumulation are nil".

The work of Frank, Wallerstein, Emmanuel and Amin came under increasing criticism in the 1970s. These criticisms are examined in

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detail below, but one major reason was the logical implication of the thesis that the contemporary Third World would be stagnant, and de- velopment would be impossible, so long as nations in the periphery remained tied to the core-dominated world system. The problem for the theory was that it hardly fitted the reality of high growth in much of the Third World in the 1960s and 1970s. All kinds of contorted at- tempts were made to explain this problem (see below and Chapter 5), but most writers accepted that Frank's stagnationist thesis was too strong. One response by those sympathetic to his focus on the inter- national economy was to introduce a "softer" version of underdevel- opment theory, known as dependency theory. This approach was also influenced by the work of Pre bisch, but it argued that his solution to the problem of unfavourable terms of trade - that is, industrialization - had led to a new one - dependence. The Latin American economist Theotonio dos Santos (cited in O'Brien 1975: 12) summarized the basic hypothesis:

Dependence is a conditioning situation in which the economies of one group of countries are conditioned by the development and expansion of others.

First World countries may advance through self-impulsion, but the dependent economy can "only expand as a reflection of the expan- sion of the dominant countries, which may have positive or negative effects on their immediate development" (ibid.).

So, in arguing that development could occur in the periphery, de- pendency theory challenged a central argument of underdevelop- ment theory. On the other hand, in arguing that this peripheral or dependent development was largely at the behest of the core, the theory retained another of Frank's central arguments (see also Cardoso 1982, Cardoso & Faletto 1979).

A critique

These theories have all been challenged by both neoclassical and Marxist theories. The industrialization of parts of the periphery led to a return to modernization theory, although this time it was more clearly associated with neoliberal economics (Little 1981, Berger 1986, Fukuyama 1992), and to a return to orthodox Marxism,

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though this too was often in an amended form (Warren 1973, 1980). The contentions of these theories are analyzed in more detail in the third section, and detailed debates around the industrialization of the Third World are discussed in Chapter 5. What I want to do here is fo- cus on the methodological problems of these theories, and draw out some of their implications. My critique of underdevelopment theory and its close relatives is divided into five closely related parts: (a) its analysis of trade; (b) its analysis of class; (c) its methodological ap- proach to core and periphery; (d) its approach to evolutionary theory; (e) its political implications.

Underdevelopment theory and trade The central contention of underdevelopment theory is that the core develops through the underdevelopment of the periphery, which takes place through a process of the former extracting the surplus of the latter. But, as the neoclassical economist Peter Bauer (1984a: 134) points out, the poorest nations of the world are precisely those nations that trade only in small amounts. The force of this argument is power- ful, even if one need not accept Bauer's "medicine" for alleviating the situation. In fact, both neoclassical and underdevelopment theory, in focusing on trade relations, neglect an analysis of how a surplus is pro- duced in the first place. This can be illustrated through a discussion of underdevelopment theory's account of surplus extraction.

The precise mechanisms of this process are not always made clear, but trade obviously plays a key role. However, this leads to two ques- tions: what are the origins of capitalism? and why do some countries benefit, and others lose, within this world economy? The implication - and this seems to be confirmed in the quotation from Wallerstein above (and in his most explicitly neoclassical position in Wallerstein 1986) - is that capitalism has its roots in the emergence of individuals who have the motivation to pursue profit maximization. The emer- gence of these entrepreneurs in western Europe enabled this region to grow at the expense of the rest of the world. The problem with this contention is that individual profit maximizing takes place within a particular social structure, which (unlike in Marx's work) is never emphasized by this school of thought. In so far as the social structure is analyzed, it is explained as a product of the needs of the system - that is, profit-making entrepreneurship creates a social structure and division of labour, rather than vice versa. So, to refer back to Chapter

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2, the underdevelopment school lacks an adequate conception of the origins of capitalism and so-called "primitive accumulation" (Marx 1976b: 873).

An example should illustrate my point. Surplus extraction is hardly unique to capitalism; as Dore & Weeks (1979: 65) state, "it is no more characteristic of capitalism in its imperialist stage than it was characteristic of competitive capitalism or ancient Rome". This point is accepted by Wallerstein (1974: 38). But this begs a further ques- tion, which has been asked by Brenner (1977: 67):

what allowed for, and ensured, that wealth brought into the core from the periphery would be used for productive rather than non- productive purposes?

The implication is clear that - for this theory at least - the only ex- planation can lie in entrepreneurial, profit-making activity. It is ironic, therefore, that this theory, which is diametrically opposed to the neoliberal view of comparative advantage, actually shares the same starting point of profit-making individuals. Brenner (ibid.: 58) makes this point clear when he argues that the model assumes "the extra historical universe of homo oeconomicus, of individual profit maximizers competing on the market, outside of any system of social relations of exploitation". Marx (1976b: 739) criticized classical po- litical economy on exactly these grounds, arguing that the capitalist "shares with the miser an absolute drive for self-enrichment. But what appears in the miser as the mania of an individual is in the capi- talist the effect of a social mechanism in which he is merely a cog" (see also on Wallerstein, Bergesen 1990: 74, and the Dobb-Sweezy debate in Hilton 1976a).

The implications of this focus on exchange relations can also be seen if one examines Emmanuel's account of unequal exchange. His starting point of different rates of surplus value combined with an equalization of the rate of profit leads to the inevitable conclusion that either there is no need for uneven development to occur in the international economy, or capitalist development should be occur- ring most rapidly in the Third World, where the rate of exploitation is higher (see Dore & Weeks 1979: 71). Either way, this suggests that the neoliberal theory of comparative advantage is right after all.

It is for these reasons that underdevelopment theory has been de-

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scribed as a "neo-Smithian" Marxism (Brenner 1977 , Jenkins 19 84a). Its contentions are diametrically opposed to the neoclassical theory of comparative advantage, but in fact it shares a very similar starting point. This is because its analysis of the social structure is not well grounded and, as a result, it assumes capitalist behaviour independ- ently of capitalist relations of production.

Underdevelopment theory and class analysis Given that this theory takes trade as its starting point, it is not surpris- ing that its analysis of class is derived from its functionality to the world capitalist market. Frank's analysis (1969b: 340-9) is based on spatial categories in which some people benefit at the expense of oth- ers in the network of metropolis-satellite relations. Wallerstein (1974: 127, see also Wallerstein 1983: 18) has similarly argued that:

the relations of production that define a whole system are the "re- lations of production" of the whole system and the system at this point in time is the European world economy. Free labour is in- deed a defining feature of capitalism, but not free labour through- out the productive enterprises ... free labour is the form of labour control used for skilled work in core countries whereas coerced la- bour is used for less skilled work in peripheral areas. The combina- tion thereof is the essence of capitalism.

Leaving aside the (highly questionable) empirical validity of this as- sertion, Wallerstein's basic (and, once again, neo-Smithian) conten- tion is that the class structure is a product of the functional require- ments of the world system. But class structure is never predetermined and is the result of human agency, and it should not be assumed that it will automatically "fit the logic" of the needs of the world system (see Brenner 1977, Connell 1984).

Underdevelopment theory and methodology The problems discussed above can be traced to the methodology used by this theory. It is a theory that hardly examines, nor needs to exam- ine, the periphery. The periphery is homogenized as an exploited mass (Leys 1982), and changes in it are read off from the needs of the core (Booth 1985, Corbridge 1986). The assumption that the underdevel- oped world can in some ways develop and still remain part of the

UNDERDEVELOPMENT AND DEPENDENCY THEORY

world capitalist system is excluded on a priori grounds. When there are changes, such as rapid industrialization in east Asia, this is dis- missed as a consequence of the needs of the metropolis, as not being genuine capitalist development, or as a change in status for some countries within the omnipresent world system (see Frank 1983). However to argue that, for example, east Asian newly industrializing countries have advanced from periphery to semi-periphery (Caporaso 1982) is hardly to explain it, still less does it explain how this industri- alization might itself change the world system itself. Instead we are left with a static model of a world system in which changes in it, and espe- cially changes in the periphery, are assumed to be "functional" to the system's needs.

Even the impressive work of Cardoso can be criticized on similar grounds. Although recognizing that dependency does not preclude industrial development, he still argues that it is in some sense depend- ent. The problem with this view is that he still begins with the idea of dependency, rather than examining the forms of foreign penetration (Cardoso 1987) and the impact of this on the class structure, and then asking whether this leads to dependence (see, on the Korean case, Hamilton 1986: 115). This suggests that dependence may be more useful as a concrete, a posteriori concept, rather than an abstract, a priori theory (Palma 1978: 911-2).

Nevertheless, despite this weakness, Cardoso's work remains im- pressive, because it attempts to examine the specificity of class forma- tion and capital accumulation in parts of Latin America. In this respect Cardoso's work presents a useful example of the way forward for "post-impasse" development theory because it recognizes the structural constraints faced by specific Third World nations, but does not fetishize these constraints so that they are seen as insurmountable and change is regarded as automatically serving the functions of glo- bal capital (Cardoso 1987: 13, see also Chapter 5).

Underdevelopment and evolutionary theory One of the great strengths of this school of thought is its analysis of the relations of conflict that exist in the international political economy. In focusing on these relations, underdevelopment theory undermined evolutionary models, which saw societies (defined as na- tion-states) passing through similar stages of development. This cri- tique was accomplished by arguing that the incorporation of

MODERNIZATION, DEPENDENCY AND DEVELOPMENT

traditional societies into the world economy was a specifically mod- ern phenomenon.

However, this challenge to evolutionary models was itself based on an implicit acceptance of its basic premises. "Genuine" capitalist de- velopment is ruled out by this theory, but this can be done only by having an implicit "model" of what constitutes "normal" capitalist development. In this sense the theory is a "mirror image" of evolu- tionary theories, where "inevitable development" in the case of mod- ernization is replaced by "inevitable stagnation or distortion" in underdevelopment and dependency (Phillips 1977, Bernstein 1979, 1982: 227, Spybey 1992: 32). It also leads to a conception of social- ism as "national development" (Bernstein 1982: 227), which is not unlike the conception of socialism in the orthodox Marxist model.

Underdevelopment theory and politics This conception of socialism as genuine national development can be seen in the work of Amin and Frank, who both emphasize the need for autarky for genuine Third World development to occur (Amin et al. 1982: 225). This is not surprising when the focus is on how trade underdevelops the periphery; the logical strategy becomes one of de- linking from the world economy. Although Frank was initially opti- mistic about the prospects for such a strategy, by the early 1980s he had become a pessimist, arguing that "this theoretical alternative never existed in fact" (Frank 1982a: 135). Such an excessive pessi- mism is the logical corollary of Frank's excessive optimism in the late 1960s, which was linked to his essentially voluntarist account of so- cial revolution. In both accounts the theory neglects "the dynamics of class and popular struggle within UDCs (underdeveloped countries), and the specific contradictions they express" (Bernstein & Nicholas 1983: 611, see also Petras & Brill 1985, Gulalp 1987).

There are also more immediate political concerns that can be de- rived from underdevelopment theory. For Frank to remain consistent to his theory, he should support the us trade boycott of Cuba, or the decline in real terms of British aid to the Third World, as good exam- ples of "anti-imperialist action". The emphasis on autarky, or de- linking from the world economy, has led to a neglect of struggles within the Third World, and an approach to some repressive Third World governments that is too uncritical. Frank and Amin's policy of "delinking" from the world economy and support for "self reliant so-

ORTHODOX MARXISM: THE WORK OF BILL WARREN

cialism" led to a rather uncritical approach to the Khmer Rouge in Cambodia (see Amin et al. 1982: 218). Other writers who share a similar methodology have emphasized how the US bombing of Cam- bodia in the late 1960s helped to pave the way for Pol Pot's accession to power. I do not wish to deny that the United States' government must accept major responsibility when it carried out these illegal and murderous acts, but it is stretching a case to argue that "the US created Pol Pot". This argument, like the methodology of underdevelopment theory, simply denies the ability of Third World peoples for meaning- ful action (for Wallerstein, such struggles are simply irrelevant - see Wallerstein 1983: 34-5), and it therefore ironically replicates the im- perialism that it so determinedly criticizes.

The return to orthodox Marxism: the work of Bill Warren

The work of Bill Warren arose in the context of the industrialization of a number of Third World countries, which, he argued undermined the central "stagnationist" claim of underdevelopment theories (1973). This topic is the subject of Chapter 5, but here I want to sum- marize and criticize Warren's methodological approach. As this largely represents a return to one particular version of orthodox Marxism, I will be brief.

Warren (1980: ch.7) argues that socialists have been misled by the nationalist mythology of dependency theory and supported Third World nationalism at the expense of international socialism. The view that imperialism retards the development of the productive forces is (at least in his 1980 work) traced back to Lenin, who de- scribed capitalism in its monopoly stage as parasitic and in a state of decay (ibid.: chs 4 & 5). In fact, Warren argues, imperialism has pro- moted the development of capitalism in the Third World, and the ob- stacles that exist to its further development must be rooted firmly in the internal conditions of Third World societies (ibid.: 253).

So, like some of Marx's writings on colonialism (see previous chap- ter), Warren supports capitalism in the periphery and argues that im- perialism at least provides the basis for expanding this progressive development. He argues (Warren 1973: 41, see also Warren 1980: 136) that:

MODERNIZATION, DEPENDENCY AND DEVELOPMENT

If the extension of capitalism into non-capitalist areas of the world created an international system of inequality and exploitation called imperialism, it simultaneously created the conditions for the destruction of this system by the spread of capitalist social rela- tions and productive forces throughout the non-capitalist world. Such has been our thesis, as it was the thesis of Marx, Lenin, Luxemburg and Bukharin.

Capitalism, and by implication imperialism, is seen as progressive because it promotes the development of the productive forces, which sows the seeds of socialism (Warren 1980: 11-18). It does this not only by a process of the material development of the productive forces, but by the destruction of traditional cultures (ibid.: 18-25), which also serves as a bridge to socialism. The fascism of two rela- tively advanced capitalist states in the 1920s and 1930s is dismissed as "an interlude that arose not from fundamental characteristics of capitalism as such . . . but from specific conditions in particular states" (ibid.: 28).

Clearly, then, Warren is adamant that there is a "developmental logic" to capitalism, which appears to occur regardless of the actions of human beings - except, of course, when their actions do not con- form to such a logic. He argues that "[c]apitalism and democracy are ... linked virtually as Siamese twins", but adds as a footnote that this observation relates specifically to western Europe (ibid.: 28). The clear assumption, in classic Rostowian fashion, is that, because it hap- pened in the West, then it must happen elsewhere. The rise of democ- racy in Europe is thereby "explained" as the product of the logic of capitalism rather than as the product of the struggles of exploited classes in capitalist society. Once again, a grand theoretical model fetishizing the real world is used instead of an analysis rooted in the history of real social struggles.

For all of Warren's criticisms of the orthodox Marxism of the Comintern (the Third International), his work should be located in precisely this paradigm. The Third International saw imperialism as a hindrance to the development of the productive forces, while Warren sees it as a promoter of this development. Both are searching for an agency to carry out a similar developmental logic. This preoccupa- tion with development of the productive forces:

ORTHODOX MARXISM: THE WORK OF BILL WARREN

leads Warren to an abstract vision of capitalism and, further, to an extension of this vision to that of imperialism. His arguments are couched within a framework that excludes the actual mechanisms of conflict between classes, as well as capitals. (Gulalp 1986: 149)

Warren therefore abstracts from the class forces that exist in a par- ticular space and at a particular time. Western capitalism - but not the struggles that created Western capitalism - is upheld as a model for the rest of the world so that the process of history, the development of the productive forces, can continue. Rostow's tradition-modern dichotomy, and along with it the inability to explain (among others) the creation of slavery in the New World and forced labour in the colonies, has returned. It seems that, for Warren, there is only one form of capitalist development.

This developmental approach can also be seen in the work of a number of Warren's sympathizers. For example, John Sender and Sheila Smith (1985, 1986, 1990) have convincingly challenged some of the key contentions of underdevelopment theories. In particular they have shown (1986: 113-27, see also Warren 1980: 140-3) that the economic performance of African countries cannot simply be "read off" from an alleged tendency for the terms of trade to decline, because this varies between African countries with similar export pat- terns. However, even this point should be qualified. Although these writers are undoubtedly correct in arguing that the problems of the Third World cannot be explained solely by external causes, they fail to prove that internal factors are the sole cause of "backwardness". The fact that the problems of the Third World cannot be read off from unfavourable terms of trade does not mean that these factors cease to exist (Larrain 1989: 197, see also Spraos 1983, which, con- trary to Sender and Smith's common implication, argues - albeit in a far less mechanistic way than most writers - that the terms of trade are often unfavourable for primary producers).

Moreover, the developmental logic of these writers leads them to some odd prescriptions for development of the productive forces. It is argued that the further development of the productive forces can be achieved by the promotion of capitalist relations of production (Sender & Smith 1986, also Mueller 1980, Hyden 1983). The prob- lem with this approach is that it again rests on a model of capitalism that is abstracted from real historical processes - and, in the case of

MODERNIZATION, DEPENDENCY AND DEVELOPMENT

Africa, from the emergence of settler capitalism in colonial Kenya, Rhodesia and South Africa (G. Williams 1987: 650). Sender and Smith recognize that there will be costs in developing capitalism (for example 1986: 77), but they want to have it both ways, by supporting the strengthening of progressive class forces and by placing "the is- sues of trade union rights, wages and working conditions on the agenda" (ibid.: 132). How this concern fits with their "success sto- ries" of Malawi, Kenya and the Ivory Coast is unclear, but what is more relevant here is how their technicist approach to development and the productive forces leads to a purely technicist account of the state and policy-making. They rightly argue that successful capitalist development rests on the establishment of a capitalist state. However, they then argue that "a method must be devised for the appropriation of sufficient surplus to ensure the smooth functioning of the military and repressive apparatus", as well as policy measures such as higher prices paid to farmers to maintain food supply (1986: 112). While there is nothing necessarily wrong with this particular policy pre- scription, it is wishful thinking to imply that Africa's problems are simply the result of incorrect policies. Once again, the "rational state" of advanced capitalist societies is transformed into an abstract, ahistorical model, which deserves support because it will further the development of the productive forces. The "rational entrepreneur" of neoclassical and underdevelopment theory is replaced by the "ra- tional state", which is divorced from the existing social structure. If one analyzes the existing social structure, rather than a supposedly fu- ture one based on Western capitalism as a model, then it is possible to conceptualize the "irrational state" based on corruption and patron- age as "a highly rational and modern attempt by capitalistic interests to appropriate monopoly rents through privileged access to official- dom" (Brett 1988: 28-9). The struggle to overcome these factors is a social struggle, not simply a technical question of ensuring "the smooth functioning of the military and repressive apparatus".

So, the work of Warren and his sympathizers is best characterized as a return to the stagism of orthodox Marxism. Social struggle is sub- ordinated to the implementation of abstract models of a "normal" capitalism and "ideal" state, which develop the productive forces and therefore provide the material conditions for a future socialism. So- cialism is rejected as inappropriate for backward societies (Sender & Smith 1990: 132) and capitalism is supported because it is best able to

CONCLUSION

develop the productive forces. This approach rests on an ahistorical conception of capitalism, a neglect of international forces (see for ex- ample Sender & Smith 1986: 11-13), and a "fetishism" of the state (Bernstein 1987: 169-70).

Conclusion

Modernization theory, underdevelopment theory and the orthodox Marxist theory of the primacy of the productive forces have all been rejected in this chapter. Although these theories were counterposed to each other, they actually share three critical weaknesses: first, they each have a "developmental" logic; secondly, they each read off changes in the periphery from the needs of the core; and thirdly, they share a similar conception of progress.

Developmentalism

This can be defined as the idea that people are "passive actors" in the grand theatre of history, and that social change has a predetermined logic, which moves society towards a certain end (for a critique of this evolutionism, see Giddens 1984: 236-9). In their obsession with fetishized theoretical models, these theories have lost sight of "those social forces and formations which by their rise and fall, by their dis- solution and recomposition largely shape and make history" (Tenbruck 1990: 205).

Thus, debates between underdevelopment and orthodox Marxist theories have focused on capitalism in the abstract and its capacity (or lack of it) to bring about development. The result is the "impossibil- ism" of Frank et al. against the "inevitabilism" of Warren et al. (and modernization theory). As Gulalp (1986: 155) has argued, "the terms of the debate are couched within a framework that idealizes the expe- rience of western capitalist development and asks whether or not the idealized experience is reproduced in the rest of the world" (see also Williams 1978a). Development is thereby naturalized, rather than analyzed as a social and historical process.

MODERNIZATION, DEPENDENCY AND DEVELOPMENT

Core-periphery relations

This idealization of the Western experience leads on to the second problem, which is that both sides examine the periphery only in so far as it is determined by the centre. Underdevelopment theories see the centre as an obstacle to its developmental logic, while modernization theories see the centre as the promoter of a developmental logic. Or- thodox Marxism falls on either one side or the other; imperialism either retards the development of the productive forces (the Third In- ternational) or it promotes them (Warren, Sender and Smith). Nei- ther side is prepared to account for the historical specificities of different Third World countries, which cannot be read off from an imperialism that is assumed to be homogeneous in its effects on the periphery. As Gulalp (1986: 156-7) states:

imperialism ... is neither an agent of diffusing the capitalist mode nor that of creating underdevelopment as an abstract process with a singular outcome. It is rather the process of creating an interna- tional division of labour with different outcomes in different parts of the world as well as in different phases of the development of capitalism on a world scale.

This has implications for how one conceptualizes the global politi- cal economy and the place of the Third World in it, which I return to in later chapters. For now, it should be clear that these theories rest on the common methodological weakness of seeing the "rest" in the im- age of the "West", which in turn can be derived from a common evo- lutionary position on development.

Progress

The principal consideration of each side in the debate is therefore economic growth. Progress is defined in terms of "the expansion of the market" or the "development of the productive forces" (Williams 1978a: 925). But this conception of progress is based on only one side of modernity and fails to capture its "dark side". Social actors thereby become subordinated to the "inevitability of progress", with all the social costs that this entails.

This is most clear in the case of the environment, where it has be-

CONCLUSION

come increasingly obvious that it is simply impossible for all nation- states to follow similar paths of development for the simple reason that it could not be environmentally sustainable. As Gandhi (cited in T. Allen 1992: 389) commented in 1928:

God forbid that India should ever take to industrialization after the manner of the West. The economic imperialism of a single tiny island kingdom is today keeping the world in chains. If an entire nation of 300 million took to similar economic exploitation, it would strip the world bare like locusts.

So, the "contribution" of these theories to the impasse is that they are based on an evolutionary logic that theorizes a model of ideal capitalist development, that has the same effect, both in different places and at different times. The next chapter examines one re- sponse to this problem.

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