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 post-war period who sought to frame a comprehensive theory of development (Modernisation theory)
• Explicit ant-communist political agenda
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)
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.
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