University of Bristol Department of Social Policy & Social Planning MSc course in Development Administration & Planning Code:

M21X Name Jos-Mara Tabern Abad !ssay "itle: Which theory of development do you find most satisfactory? ive reasons! Module "itle Theories and "olicies of #evelopment #ecturer "ervai$ %a$ir Autumn "erm 1$%%& Amon& the various theorists of #evelopment' W! (osto) and A! ! *ran+ have developed t)o incompatible paradi&ms )hich share common features: po)erful ideolo&ical stances, influence in the understandin& of the mechanics of development and underdevelopment, and methodolo&ical approaches! -y the time the authors made public their theories' it )as )idely accepted that industrialisation )as the +ey to economic development' and that this )ould not be promoted by indefinite concentration on e.pansion of primary e.ports in e.chan&e for manufactured imports / Connectin& )ith this' both scientists presented their theories -of the 0ta&es of ro)th and neo-Mar.ist #ependency respectively- as somethin& )hich had &eneral validity for all countries! 1irschman has su&&ested that for this reason his analysis belon&s to the cate&ory of 2mono-economics2: the characteristic feature of all types of mono-economics bein& a claimed universality of relevance and applicability 3! abriel "alma says that both theories are mechanico-formalistic' leadin& to conclusions that are inevitable' static and ahistorical 4! (osto) aimed at providin& an alternative to 5arl Mar.2s theory of modern history 6 developin& his model specifically in order to thro) li&ht upon the contemporary condition and future prospects of the underdeveloped countries 7' e.plorin& both the cultural and institutional preconditions for development 8' identifyin& five 2sta&es of &ro)th2: the traditional society' the establishment of the preconditions for ta+e-off' the ta+e-off' the drive to maturity and the a&e of hi&h mass consumption 9! A factor )hich serves to lift an economy out of lo) income sta&nation on to a sustained &ro)th path is a si&nificant increase in the share of savin&s and investment in national income! *or this to occur -and inspired from 0chumpeter :- a ne) class of entrepreneurs; businessmen must emer&e <' usually from outside the society' )illin& to ta+e ris+s in pursuit of profit' notably in commerce! *inancial institutions develop and modern manufacturin& enterprise appears' usually in substitution for imports /= -earin& in mind the history of current developed countries -but denyin& all history to the underdeveloped ones //- (osto) proposes specific time lapses for the five sta&es to occur! >n the other hand' *ran+ initially follo)s "aul -aran2s -founder of the neo-Mar.ist school /3- class-based analysis: Central elements of the neo-Mar.ist analytical method are the adoption of a historical perspective' and a focus on the class distribution of control over the surplus in underdeveloped countries /4! -aran distin&uishes bet)een actual surplus' )hich represents the difference bet)een society2s actual current consumption' and potential surplus' )hich represents the difference bet)een the output that could be produced in a &iven natural and technolo&ical environment )ith the help of employable productive resources' and )hat mi&ht be re&arded as essential for consumption /6! ?conomic development consists in national reinvestment of the surplus and the conse@uent e.pansion of national output /7! ?conomic underdevelopment is a process /8 as )ell! The economically bac+)ard countries have the )orst of t)o )orlds' feudal and capitalist/9! Therefore prospects for development in the periphery based upon an indi&enous bour&eoisie are 1

essentially non-e.istent/: Althou&h relevant dependency model theorists -li+e -ra$il2s *!1! Cardoso- thin+ that today' faith in universal or ideolo&ical solutions has been lost' and that ideolo&ies that separated or united people have &iven )ay to pra&matic endeavors born of common challen&es )hich re@uire a stron& )ill to co-operate /<' A thin+ that the neo-Mar.ist theory is the most satisfactory amon& the paradi&ms for understandin& present-day development and underdevelopment' successfully e.plainin& the evolution of social and economic relations' the uneven distribution of )ealth and the unableness of the capitalist system in providin& decent conditions of life to a fraction of the )orld2s population! iven the polarity of this subBect' A )ill focus in the central concepts of both theories! A )ill then discuss the elements and empirical evidence of *ran+2s model )ith re&ard to )hat (osto)2s does not e.plain and his shortcomin&s! 'entral concepts -aran2s Mar.ist unorthodo.y is follo)ed by *ran+2s radical vie): Capitalism is implicitly defined in terms of monopolistic3= e.chan&e relations and not relations of production! The )orld capitalist system is a pyramidal structure )ith' at the base' the rural re&ions of the periphery! These satellite re&ions are lin+ed' throu&h trade -the overridin& method of surplus e.traction 3/-' to small centres of surplus accumulation' their local 2metropolises2! These in turn are satellites' and subBect to surplus appropriation by the )orld centres of capitalism33, so merchant capital penetrated even the remotest corners of the periphery! The phase of competitive capitalist development' )hen capitalism is at its most dynamic' has been undercut in the periphery by forei&n competition34! Thus the unavailability for investment of 2potential2 economic surplus is due to the monopoly structure of capitalism 36! *eudalism never e.isted in Catin America 37! Andeed' the )orld capitalist economy is a sin&le inte&rated )hole 38: Dnderdevelopment in the periphery is the necessary counterpart of development at the centre 39! Therefore there is no Third World, if the socialist countries have mana&ed to escape from this system' then there are t)o )orlds' but in no case are there three 3:! *ran+ indirectly defines dependence: a metropolis )hich is at the same time a satellite )ill find that its development is not autonomous, it does not itself &enerate or maintain its development, it is a limited or misdirected development, it e.periences underdeveloped development 3<! 2$ !lements These central concepts have morpholo&ical' historical' and moral elements: *ran+ assumes Mar.2s idea that the )hole )orld is one capitalist nation 4=, Capitalism could not e.ist )ithout the contradictions of a structure of e.ploiter and e.ploited! These contradictions are the e.propriation of economic surplus from the many and its appropriation by the fe)' the polari$ation of the capitalist system into metropolitan center and peripheral satellites' and the continuity of the fundamental structure of the capitalist system throu&hout the history of its e.pansion and transformation' due to the persistence of these contradictions every)here and at all times 4/! An Cumpenbour&eoisie: Cumpendevelopment for the first time *ran+ brou&ht the concept of dependence to his analysis43! T)o years after #os 0antos spelled the most )idely @uoted 44 neo-Mar.ist definition of dependency' as 2a situation in )hich economies of one &roup of countries are conditioned by the development and e.pansion of others2' *ran+ plainly states that the )ord dependence is no more than an euphemism that cloa+s subBection' oppression' alienation' and imperialist racism' all of )hich are internal as )ell as e.ternal 46! Af dependence )ere purely e.ternal' it could be ar&ued that conditions e.ist )hich )ould permit the national bour&eoisie to propose an autonomous solution to the problem of underdevelopment! -ut in his vie)' such a solution does not e.ist because dependence is indivisible and ma+es the bur&eoisie itself dependent 47! This moral understandin& &oes further: An Catin America as else)here' the role of promotin& historical pro&ress has no) fallen to the masses of people alone, and those )ho )ould honestly serve the pro&ress of the people 2

must support them in achievin& pro&ress by themselves! To applaud and to support the bour&eoisie in its already played-out role on the sta&e of history is treacherous 48! *ran+2s initial intellectual schi$ophrenia 49 )ould lead to a position determinant in the Theolo&y of Ciberation prior to /<93 4:' ac@uirin& theolo&ical dimension )hen the 2sin of dependency2 )as placed in the actual reality 4<! *rom the morpholo&ical standpoint' *ran+ e.amines these determinin& relationships bet)een AE economic dependence AAE class structure or lumpenbour&eoisie and AAAE policy of underdevelopment! Within the )orld capitalist system only those metropolitan centres )hich are not subBected to e.propriation of part of their surpluses can develop fully 6=! All other re&ions are destined to develop underdevelopment! ?ach metropolis holds monopoly po)er over its satellites, the form of this monopoly varies from one case to another! Metropolitan monopoly is e.erted by forei&n investment and technolo&y 6/! #omestic industry must not be confused )ith national industry as lon& as the former contains a si&nificant share of forei&n companies and therefore control63! The class structure is important to define underdevelopment' so a dependent re&ion cannot be understood e.cept as the product of a policy formulated in response to class interests' )hich are in turn determined by the dependence of the satellite on the colonialist metropolis 64! This interconnection produces increasin& polari$ation bet)een the t)o ends of the metropolis-satellite chain! A symptom of this polari$ation is the &ro)in& international ine@uality of incomes! Fet there is even more acute polari$ation at the lo)er end of the chain' bet)een the local metropolises and their poorest rural and urban satellites )hose absolute real income is absolutely declinin&! This increasin& polari$ation sharpens political tension bet)een imperialist and national bour&eoisies in the one hand and their rural and city slum d)ellers on the other! overnmental cabinets spa)n policies of economic' social' cultural' and political underdevelopment for the nations66' )hich are manifest )ith re&ard to the indi&enous peoples of Catin America' )hose supposed nonmar+et subsistence economy is often said -accordin& to the dualist model- to isolate them from national life' find themselves fully inte&rated into this capitalist structure' albeit as super-e.ploited victims of internal imperialism! 0ince they thus are already inte&ral parts of the system' the all-too-common policy of tryin& to 2inte&rate2 the Catin American Andians into national life throu&h community development proBects is therefore senseless and condemned to failure 67! Concernin& the import substitution issue' no) that the source of metropolitan monopoly no lon&er lies in industrial production itself as in paricular +inds of industry and technolo&y' it has been )idely hailed by metropolitan economic advisers to the underdeveloped countries as the maBor step to)ard their development! 0uch policy' )hen underta+en )ithin the frame)or+ of the capitalist system' cannot afford the advertised salvation' but must instead be but another step into deeper structural underdevelopment! The choice of imports to be substituted by domestic production is based on several criteria: relatively lo) capital cost and simple technolo&y, &oods )hose domestic prices are hi&h and in the production of )hich there is little or no competition precisely because their importation is restricted by a protective tariff a&ainst 2non-essential2 imports! The further this process is e.tended and the lon&er it continues' the more technically complicated and costly the e@uipment that must be imported and the more limited the income ran&e and number of potential domestic consumers )ho can buy the final products 68! -ut' above all' import substitution is of consumer &oods for the hi&h income consumer mar+et 69! *rom the historical standpoint' the model emphasi$es its transformation particularly of the basis of metropolitan monopoly' )ithin the capitalist system! The fundamental metropolis-satellite structure has remained the same throu&hout' but the basis of metropolitan monopoly has chan&ed over the centuries: ?.pansion of the system from ?urope until it incorporates the entire planet in one )orld system and structure, development of capitalism' at first commercial and later also industrial' on a )orld scale as a sin&le system, polari$in& tendencies &eneric to the structure, fluctuations )ithin the system' li+e booms and depressions' and substitution of one metropolis by another, transformations )ithin the system' such as the so-called industrial revolution6:! An the case of Catin America' *ran+ focuses on: The colonial structure, the a&rarian structure, Andependence, the civil )ars: nationalism vs! free trade, the liberal (eform, imperialism, bour&eois 3

nationalism, and contemporary neoimperialism and neodependence! *rom this model )e may derive hypothesis about metropolis-satellite relations and their conse@uences: the rela.ation' )ea+enin& or absence of ties bet)een metropolis and satellite )ill lead to a turnin& upon itself on the part of the satellite' an involution )hich may ta+e one of t)o forms: "assive capitalist involution to)ard a subsistence economy of apparent isolation and of e.treme underdevelopment, here may arise the apparently feudal features of the 2other2 sector of the dualist model' but really reflect the ultra-incorporation' its stron& ties follo)ed by the re&ion2s abandonement 6<! Active capitalist involution )hich may lead to a more or less autonomous industriali$ation of the satellite, development of the satellites thus appears not as the result of stron&er ties )ith the metropolis but occurs on the contrary because of the )ea+enin& of these ties 7=! The rene)al of stron&er metropolis-satellite ties produces the follo)in& conse@uences: (ene)al of underdeveloped development conse@uent upon the reopenin& of the mar+et for the retrenched re&ion2s e.ports, it is Bust as misadventa&eous in the lon& run' underdevelopment continues to develop! >r' stran&ulation of the autonomous development underta+en by the satellite durin& the period of lesser ties 7/! The une@ual e.chan&e relations' imposed by force 73 must be chan&ed by the only true development' armed revolution and the construction of socialism! The immediate tactical enemy of national liberation is the bour&eoisie itself' in spite of the fact that' strate&ically' the principal enemy is imperialism 74! ($ !mpirical evidence *or *ran+' it is impossible to find in the )orld today any country or society )hich has the characteristics of (osto)2s traditional sta&e 76! This e.pectation is entirely contrary to fact and beyond all realistic theoretical possibility77! Thus he proposes several items to prove his model: ?.ternally financed e.pansion' debt crisis' international polari$ation throu&h forei&n trade' domestic polari$ation' latifundia-minifundia polari$ation' o)ner)or+er polari$ation )ithin minifundia' polari$ation and industrial underdevelopment' and consolidation of underdevelopment' amon& others' )hile statin& his refusal to accept the supposed empirical foundations and therefore the formulations of the problem of' and policy for development associated )ith the principles of analysis of the D% ?conomic Commission for Catin America 78! *ran+ @uotes79 )hat 5uunisen )rote in 2The *undamentals of Mar.ism-Ceninism2: At is characteristic of capitalism that the development of some countries ta+es place at the cost of sufferin& and disaster for the peoples of other countries2: The income of the )ealthyest billion people in the )orld is si.ty times bi&&er than that of the poorest billion people7:! The real income has decreased by 3=G in Catin America in the /<:=s 7<! An the developed countries there is one doctor every 6== inhabitants, in developin& countries there is one every 9'=== 8=! The %orth has one fifth of the )orld2s population and four fifths of the &lobal income' consumes 9=G of the ener&y' 97G of the metals and :7G of the timber 8/! ?ach year a surface e@ual to Austria2s is deforested 83! 3=G of Catin American university &raduates have mi&rated abroad 84! Andustrialised countries seriously restrict the import of some commodities li+e clothin&' te.tiles' shoes' primary manufactured &oods'etc! At is the oppulent %orth' not the poorest 0outh' )hich no) refuses to the structural adBustment of its economy 86! The e.tremely contradictory character of pro&ress under capitalism applies even to different re&ions of one and the same country! The comparatively rapid development of the to)ns and idustrial centers is' as a rule' accompanied by la&&in& and decline in the a&ricultural districts 87: MaBor une@ualities in -ra$il are those amon& the &roups of income! -ut there are also acute re&ional differences: the 1uman #evelopment Ande. of its southern re&ion e@uals that of "ortu&al' )hereas the 1#A of the northeast is li+e that of ?l 0alvador or -olivia2s88! Technolo&y is represented in automation' cybernetics' industrial technolo&y, chemical technolo&y -the substitution of the satellites2 ra) materials by metropolitan synthetics-, a&ricultural technolo&y -the importation of food by the 2a&ricultural2 satellites from the industrial metropolis-, and' as al)ays' military technolo&y 89: 4

#evelopin& countries arms purchases increased three times faster than those of industrialised countries bet)een /<8= and /<:9 8:! Amon& *ran+2s theorisations is the continuity and ubi@uity of the structural essentials of economic development and underdevelopment throu&hout the e.pansion of the capitalist system at all times and places! As ?n&els su&&ested' 2there is a contradiction in a thin& remainin& the same and yet constantly chan&in&2 8<: ?conomic activity in the industrialised countries slo)ed further in /<<4' to /'3G' as a result of slu&&ish &ro)th in Japan and recession in continental ?urope! The rate of &ro)th in the volume of )orld merchandise e.ports slo)ed to an estimated 3!8G in /<<4 9=!The developin& countries &re) by an estimated 6'7G' thereby e.ceedin& industrial-country &ro)th by more than three percenta&e points for the third strai&ht year! Catin American &ro)th' supported by lar&e inflo)s of forei&n private capital' rose to 4!7G' up from 3':G in /<<3 9/! The total e.ternal debt of all developin& countries )as estimated at H/'9== billion at the end of /<<4' an increase of 8!7G over the previous year 93! *an+ concludes his Cumpenbur&eoisie 94 )ith a speech of a Chilean *orei&n Minister to the D0 "resident in /<8<: for Catin America' private investment has meant' and no) means' that the sums ta+en out of our countries are several times hi&her than the amounts invested! An a )ord' )e +no) that Catin America &ives more than it receives! 0o he said at the be&innin& of the /<9=s' before the emer&ence of the e.ternal debt crisis' and the neo-fascist military coups in Chile' Ar&entina and Dru&uay' and several years ahead of the )ar in %icara&ua' el 0alvador and uatemala! !NDN)"!S
/! 1unt' #! I/<<6E' p!68 3! Abid' p!/== 4! Abid' p!3/< 6! Abid' p!<8 7! Abid' p!/== 8! Abid' p!84 9! Abid' p!<9 :! Abid' p!/== <! Abid' p!<9 /=! Abid! //! *ran+' A! ! I/<8<E' p!6= /3! 1unt' #! I/<<6E' p!/84 /4! Abid! /6! Abid' p!/88 /7! Abid' p!/84 /8! Abid! /9! Abid' p!/89 /:! Abid' p!/87 /<! Cardoso' *!1! I/<<4E' p!: 3=! 1unt' #! I/<<6E p!/96 3/! Abid' p!/94 33! Abid' p!/96 34! Abid' p!/87 36! *ran+' A! ! I/<89E' p!9 37! Abid' p!.iii B*B#*)+,AP-. /! 1unt' #! ?conomic Theories of #evelopment! 1emel 1empstead: 1arvester Wheatsheaf! /<:< 3! *ran+' A! ! Cumpenbur&eoisie: Cumpendevelopment! %e) For+: Monthly (evie) "ress! /<93 4! *ran+' A! ! Capitalism and Dnderdevelopment in Catin America! %e) For+: Monthly (evie) "ress! /<89 6! Cu.embour&' (! Amperialism and the Accumulation of Capital 7! #ussel' ?! Misterium Ciberationis: Teolo&a de la CiberaciJn y Mar.ismo! 0an 0alvador: DCA ?ditores! /<</ 8! *ran+' A! ! Catin America: Dnderdevelopment or (evolution! %e) For+: Monthly (evie) "ress! /<8< 9! Cardoso' *!1! Compartir la "rosperidad! Madrid: ?l "as-%"K! /<<6 :! Anforme sobre #esarrollo 1umano' D%#"! Me.ico: *ondo de Cultura ?conJmica! /<<6 <! The World -an+ Annual (eport' The World -an+! Washin&ton #C: World -an+ "ress! /<<6 38! 39! 3:! 3<! 4=! 4/! 43! 44! 46! 47! 48! 49! 4:! 4<! 6=! 6/! 63! 64! 66! 67! 68! 69! 6:! 6<! 7=! 1unt' #! I/<<6E' p!/96 Abid' p!/9: *ran+' A! ! I/<89E' p!/69 Abid' p!/6: Cu.embour&' (! p! *ran+' A! ! I/<89E p!4 1unt' #! I/<<6E' p!3=3 Abid' p!3== *ran+' A! ! I/<89E' p!< *ran+' A! ! I/<93E' p!6 *ran+' A! ! I/<89E' p!.vii Abid' p!.viii #ussel' ?! I/<</E' p!/38 Abid' p!/64 1unt' #! I/<<6E' p!/96 *ran+' A! ! I/<89E' p!3=: Abid! *ran+' A! ! I/<93E' p!/ Abid' p!673 *ran+' A!&! I/<89E' p!.ii Abid' p!3=8 Abid' p!3=7 Abid' p!/6: Abid' p!/69 Abid' p!/6: 7/! Abid' p!/6< 73! 1unt' #! I/<<6E' p!/84 74! *ran+' A! ! I/<89E' p!/67 76! *ran+' A! ! I/<8<E' p!6/ 77! *ran+' A! ! I/<89E' p!.vi 78! Abid' p!7 79! Abid' p!< 7:! D%#"! I/<<6E' p!3 7<! Abid' p!3< 8=! Abid' p!43 8/! Abid' p!3= 83! Abid' p!44 84! Abid' p!94 86! Abid' p!96 87! *ran+' A! ! I/<89E' p!< 88! D%#"! I/<<6E p!//3 89! *ran+' A! ! I/<89E' p!3/3 8:! D%#"! I/<<6E' p!77 8<! *ran+' A! ! I/<89E' p!/6 9=! World -an+! I/<<6E' p!4= 9/! Abid' p!34 93! Abid' p!37 94! *ran+' A! ! I/<93E' p!<6