Development Theory I: Modernisation and Dependency Structure of the Lecture • Section One: Brief Historical Introduction • Section Two: Modernisation Theory • Section Three: Dependency Theory • Section Four: Capitalist Structuralism 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 • 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’ • 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 • The work of these early scholars was quickly dwarfed by contributions of US based liberal scholars in the early postwar period who sought to frame a comprehensive theory of development (Modernisation theory) • Explicit ant-communist political agenda • 1960s (in wake of the Cuban revolution) formation of a radical explanation of underdevelopment Modernisation Theory • Has cultural, political and economic component • Different authors stress different aspects of the argument • 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 • 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 • 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’. Basic: Social stratification, Cultural Legitimating Advanced: Bureaucratic Organisation, Money and the Market Complex, Generalised Universalistic Norms, and finally Democracy • 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 • 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 • 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. • Lewis. Dual Economy and Expanding Capitalist nucleus • Two economies in underdeveloped state (capitalist and traditional) • The key to achieving growth is expand capitalist sector • It is necessary to channel additional resources to the sector. • Squeeze the peasantry • Importantly there is no serious consideration of external constraints • 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 • 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 ) 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 • 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 • 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 • The Amin variation • Different explanation of Unequal Exchange: Wages and Dynamic Advantage • Excepts that there is pre-capitalist elements in the third world • 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. • 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? • 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 • It is necessary to channel additional resources to the sector. • Squeeze the peasantry • Importantly there is no serious consideration of external constraints 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 • 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 • • • • 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) Conclusion Questions for You: What do these two approaches agree upon? What can be salvaged? 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.