Inequality Lecture l2

Development and Inequality l

I. Just as life chances are unequally distributed within society, so are there inequalities of life chances on an
international/global order.
A. These inequalities are conventionally known in terms of a ranking of worlds. A
First, Second and Third Worlds with Africa now considered a Fourth World.
B. And as with social inequality within nations, i.e. social class, these are not simply
positions in a hierarchy, these are relationships.

II. The group of countries collectively called the Third World (TW) were shaped by
- the impact of Western colonization, by countries called First World and
- the trading links that these Western states forged with the now TW
countries.
A. The relative position of TW countries in the world's development hierarchy is normally assessed
by comparing such things as
- international rates of manufacturing and agricultural output
- proportion of the labor force employed in each sector
- level of technology
- development of education
- ratio of imports to exports
- availability and distribution of consumer goods
B. The TW is TW because it is way behind the First World in these broad criteria of economic
"development.” In other words, there is a wide gap between rich and poor countries. But what
these criteria do not capture is the development of human welfare or well-being.
C. Some will argue, however, that since the 1980s particularly, the remarkable growth rate of the
newly industrializing countries or NICs (tigers, dragons) is a new phase of rapid industrialization
in the TW. But there is good reason to be cautious about the prospects of TW development. We
are currently experiencing the fragility of economic growth/ and even economic crisis. Why?
D. First, Economic growth has been achieved and continues to be achieved at considerable internal
cost and without necessarily establishing infrastructures conducive to sustained development.
EG, there is inordinate emphasis on exports. Why? Foreign investment ( i.e., First World capital)
was attracted to low-cost labor in the TW so that low paid workers in the TW have benefited
little from their employment. In short there is little "trickling down" of incomes to the rest of the
population. How so? '
- Most of the profits go back to FW or foreign corporations (the TNCs).
There is little reinvestment in local economies
- There is increasing ownership of land by foreign corporations and this has
displaced many farmers who can find little or no alternative work. Also it has displaced low-
income families as squatter families or low-income housing have to give way to
infrastructure of elite-serving ventures (e.g., golf courses, hotels, industrial zones).
E. Second a vast majority of TW experienced little or no growth at all which means that only a
limited number of TW states have been able to attract the level of foreign investment. EG, poor
countries of Africa are left out.
F. So, criteria of economic growth does not tell us much about the character of economic growth.
The kind of industrialization in the TW is very different from that which occurred in the
industrialization process of First World. Why?
1. The simple presence of economic resources such as capital, technology and labor in the TW
country is a necessary but not sufficient condition for its development
2. The country needs to be able to control all these through its state or social classes. In the TW
however, usually sufficient control is lacking (EG, because of the capital investment of
TNCs) a factor which is one of the most important political aspects reproducing the
subordination and stagnation of TW countries.
 (In Philippines, e.g., the collusion of the economic and political power can be seen in earlier
times in the sugar barons and landlord-tenant practices; today they have been replaced by
rent seekers.)
Rent Seeking: expenditure of resources in order to bring about an uncompensated transfer of
goods or services from another person or persons to one’s self as the result of a “favorable”
decision on some public policy. There are various ways by which individuals or groups
lobby government for taxing, spending, and regulatory policies that confer financial benefits
or other special advantages upon them at the expense of taxpayers or of consumers or of
other groups or individuals with which the beneficiaries may be in economic competition.
E.g., crony capitalism, or CODE-NGO who are liable to plunder.
3. These practices are in part an expression of the weakness of both the dominant and
subordinate groups (the capitalist class and the working class) and of the state in the TW
country.
G. Thus the condition of TW countries is not a matter of a defect in the attitude of TW peoples
(e.g., TW people are inferior, do no have a work ethic, they are lazy) or a lack in knowledge.
Nor is it a matter of timing. or of catching up. It is a matter of historical consequence. We shall
take the Phil as example of the historical circumstances. And we shall focus on a class analysis.

III. The Development of Underdevelopment

A. From the 16th to 19th C Western nations (England, Netherlands, France, Spain,
Portugal, Belgium, etc.; in later centuries, the US and Japan) embarked on a search for places in Asia,
Africa, South and Central America to invest their surplus (or excess) capital where it could obtain
higher than average profits. These Western nations sought new markets in which to sell their products
and sought ways to cheapen production by gaining access to sources of inexpensive raw materials
and labor power
B. Imperialism, or the drive to conquer and subjugate other peoples of which
colonialism was one expression, results from these pressures toward external expansion.
C. This process drained off many of the resources of the colonized countries and set in
motion an increasing divergence of wealth between FW and TW countries and meant:
1. The impoverishment of increasing numbers of the conquered population as lands were
seized and converted to cash crops for export to imperialist countries.
2. The institutionalization of inequality in access to land, resources and power: setting up
private-estates, instituting legal measures favoring colonists and certain sectors of the
population. (E.g., Spain in the Philippines; church and state collusion with church estates;
Zobel-Ayala estates/land grabbing)
3. The emergence of powerful groups whose interests were linked to the maintenance of the
flow of foreign capital
D. The imperialist country, and imperial/foreign capital restructured the economy and
redirected it to serve its interests by
1. Developing cash crops (EG, sugar in Negros, abaca in Bicol)
geared toward the needs of the foreign market (EG, Manchester, UK and the US) rather than
toward domestic consumption
2. Revolutionized some phases of production and tapped only
those resources which were to its advantage, resulting in the uneven/distorted development
of the economy (EG, raw materials, cash crops)
E. By means of operations such as these, Foreign capital laid the foundation for the
specific incorporation of colonies into the world market and for its own dominance within it. Thus
even with independence, neo-colonialism or neo-imperialism was maintained globally with the
dominant position of the FW in world trade and locally within TW countries through the influence of
TNCs
F. One must not forget however that a TNCs entry into a TW economy was carried
out by means of alliance with members of the TW country's local ruling class,
EG, through joint ventures.
G. But these alliances were at once functional and contradictory for the TW ruling
class because, although broad class interests were served, as TNCs continued to intervene in the local
 economy, a large part of the surplus was not captured by the local economy but instead was
redirected to foreign economies. In other words, profits were exported to foreign countries or to
TNCs
H. So, capital crucial to industrialization is not reinvested into the local economy and
this weakened the position of the TW ruling class both nationally and internationally.

I. This relationship continues to structure the economic development of the nation

state. The global economic forces--the class practices of the world bourgeoisie (the TNCs) are locked
in an ongoing unequal relationship with the TW ruling class and the local subordinate classes.
IV. The characteristic class configuration of the neo-colonial/neo-imperialist order of a TW country
characterized by an uneven (distorted/perverse/dependent) development is very different from that of the
First World. What is this configuration?
A. The basic process in the transition to capitalism, as it evolved in the now First
World entailed the dispossession of direct producers (i.e., farmers) from their means of production
(land, tools) and the increasing conversion of these direct producers into wage workers (process of
proletarianization).
B. In other words, if farmers are dispossessed of their means of subsistence, capital
has to provide them with work for wages.
C. Yet this process of proletarianization has yet to occur in any profound way in the
TW. In contrast to the First World, the TW has a very small proportion of the population
dependent on wages; the more substantial grouping is a mass of impoverished people consisting of
peasant small-holders in agriculture, landless agricultural workers, and workers engaged in
subsistence self-employment or petty commodity production (e.g., subsistence vendors) in both urban
and rural areas. Why has this been so?
D. As capital expands in order to accumulate, it both releases and absorbs labor (i.e.,
as it revolutionizes the process of production, e.g., mechanization, technological advances). In its
path, it creates a surplus redundant population, an industrial reserve/pool army of labor.
E. In the First World, historical and technological development meant that this pool is
gradually absorbed (although not totally). But in the TW, capitalist expansion or capitalist
development is very much limited so that the release of people (e.g., from agriculture, or from their
means of production) was not followed by their employment as wage workers. (Recall: that capital
was redirected to First World through colonialism and today because of dominance of TNCs and the
weakness of the local capitalist class)
F. Thus many of the members of the industrial reserve army of labor work in the most
dehumanizing conditions, in a variety of poorly paid or unpaid tasks which serve capital (EG, bottle
washers, scavengers, domestic helpers). Many have to go abroad as overseas workers.
G. Capitalism makes profit through mechanisms other than through the wage, by
underpricing marketed goods or services (e.g., "carenderias" for the working class; child labor in
sweatshops)
V. Some countries of the TW, those that experienced the full force of European colonialism, esp. Africa,
suffered not only economic distortions but also political distortion.
A. European nations carved out territories among themselves in Africa. Colonies were
more administrative conveniences rather than self-determined nation-states.
B. And in some cases, FW needed a local group to carry out its policies and
administrative control and thus created a local class with political power. For the local population,
politics was used to acquire wealth and gain economic power and gain entry into the ruling class.
Thus local people who worked in public office became a privileged class. So, political power became
the route to economic power and to being a ruling class. (Sounds familiar? Too close to home?) ?
C. The contrast with the First World is that when the industrial revolution occurred in
these countries, the process was not simply one of political transformation following economic
differentiation (or development of capitalism) and the . consequent struggle between the old and new
ruling classes for supremacy. Rather, the development of the economy depended upon the prior
conquest of political power, which then afforded opportunities for the bourgeoisie to proceed. In
other words, an emergent capitalist class captured political power (i.e., state power) in order to
transform the economy.
 D. But in TW colonies, no such economic and political transformation occurred. And
it was the political power of the Western nation that shaped the economy of the TW to their own
interests and thus to an uneven development; and it was the Western nation that created the political
infrastructure. Thus even with political independence, the TW remained economically dependent
states.
VI. But apart from economic and political changes, imperialism and colonialism meant
- destruction of cultures, and cultural identities of conquered peoples,
- creation or reinforcement of gender hierarchies, and
- start of a chain of practices which led to the degradation of the
environment.

A. The TW peoples, at the beginning of the imperialist expansion as they do today, valued their
land. They not only lived on it, it was the raw material of their culture. (EG, people's relationship to
the trees, the forest, the waters). Thus when land was transformed for capitalist use, it meant not only
a loss of livelihood, it meant the destruction of culture.
B. Indeed, many of the changes that conquering peoples wrought were in the name of a "civilizing
mission", a "manifest destiny" to bring "heathen" people, the "barbarians" into the fold of Christianity
or civilization.
VII. The reaction of TW peoples to colonialism
A. There was resistance, often violently expressed, when they were turned into
"natives"
B. But resistance was not the only form of reaction to conquest. There were those who
reacted in despair, resignation, fatalism and defeatism
C. There were also those who adapted, of course.
D. And those emerging elites or highly ranked groups who collaborated would later
become the "comprador" bourgeoisie.
E. So reactions varied by social class and by ethnicity; and on the individual level,
certainly also by gender.