Which type of theorist would argue that a low income society can develop if people give up their traditional ways?

Abstract

Modernization theory refers to a body of theory that became prominent in the 1950s and 1960s in relation to understanding issues of economic and social development and in creating policies that would assist economic and social transitions in poorer countries. The various components of modernization theory received critiques from the outset but their influence within policy making endured for a significant period of time. The set of theories that tried to interpret the process of modernization in the 1950s and 1960s was by no means a coherent set of ideas. Rather it constituted a wide variety of theories that emerged from a range of social science disciplines – as well as countries and universities. Many subsequent critiques of modernization theory have not fully examined the wide and varied range of contributions, preferring to focus on one or two prime candidates for their analysis. This article examines a greater range of modernization theorists than normally come under scrutiny. It argues that the most significant contributions in modernization theory came from economic theorists, on the one hand, and sociologists, on the other. The aim is to reevaluate modernization theory and to reexamine these literatures in terms of two categories – the economic and sociological versions.

Modernization Theory

Modernization theory casts development as a uniform evolutionary route that all societies follow, from agricultural, rural, and traditional societies to postindustrial, urban, and modern forms (Bradshaw, 1987; Escobar, 1995; Chirot and Hall, 1982; Shrum, 2000). In other words, all societies, once engaged in the modernization process, follow a predetermined sequence of developmental stages: traditional economies, transition to takeoff, takeoff itself, drive to maturity, age of high consumption, and postindustrial society (Chirot and Hall, 1982: 82). Modernization theory emphasizes internal forces and sources of socioeconomic development such as formal education, market-based economy, and democratic and secular political structures. Although modernization theory does not rule out external forces and sources of social change and economic development, it focuses less on foreign influences (Jenkins and Scanlan, 2001; Shrum, 2000).

Among external influences, however, science is exceptional because it is considered beneficial to developing countries by way of ‘knowledge and technology transfer’ from developed countries (Shrum, 2000). In other words, societies can be fast-tracked to modernization by ‘importing’ Western technical capital, forms of organization, and science and technology to developing countries (Herkenrath and Bornschier, 2003; Shrum, 2000). W.W. Rostow argues that adoption of scientific methods and scientific ways of thinking and acquisition of technoscientific skills are critical at the ‘transition to takeoff’ stage of development (Chirot and Hall, 1982). Essentially, proponents of modernization theory view science and technology as catalysts for development. Science and technology provide conducive environments for economic growth in developing countries through their ability to provide rational protocols in decision making for the efficient use of material and human resources (Shrum and Shenhav, 1995).

As far as modernization theory is concerned, development is simply a matter of knowledge and technology transfer that is unproblematic and straightforward, context free, and not disruptive of existing social and cultural arrangements in developing countries (Herkenrath and Bornschier, 2003). Modernization theory also seems to be unmindful of the fact that much of the knowledge and technology critical for national development and national competitiveness are within the domain of proprietary knowledge production. In a way, modernization theory implies a monolithic, one-way, and top-down development scheme that holds true for all identities, for all time, for all places, and for all contexts. The same holds true for knowledge generation, production, dissemination, and representation. In this top-down development model, the sources of knowledge are foreign to the places and identities to which knowledge is applied or exported. As a model for social change and development, modernization theory fails to consider the possibility of having an interactive and multifarious process of knowledge generation and exchange, which is made possible by recent advances in ICT.

As far as modernization theory is concerned, science is seen as exceptional and different from other institutions in Western developed countries, and is assumed to be independent of and invariant to the limitations of contexts of interpretation and use, and further is viewed as a search, by means of generating objective and rational knowledge claims, for empirical truths and universal laws. Such casting of science is reminiscent of the limited translation model that Callon (1995) critiques. In other words, modernization theory emphasizes the beneficial role of objective, rational science in national socioeconomic development. It de-emphasizes science's possible higher order and negative interactional effects upon local contexts and the identities that populate such contexts.

2.5 The State-centered Thesis

Modernization theory stresses the functional necessity of efficient bureaucracy for welfare state development because, without it, effective taxation and administration of complex distributional programs is simply impossible. Bureaucracy, once erected, may also come to play an active role in decision-making and thus determine policy evolution. Heclo (1974) maintained that Swedish and British welfare policy, although originally rather similar, eventually parted ways because of inherently different bureaucratic policy-making styles and traditions. The independent powers of public officials in framing key decisions have also been emphasized especially by Skocpol (1992). This, so-called state-centered thesis has proven difficult to test empirically against rival arguments. As a result, empirical applications are limited to select case studies (such as Skocpol 1992) that are difficult to generalize, and a handful more systematic, quantitative studies (Korpi 1989).

Theories of Modernization, Dependency, and Unequal Exchange

Modernization theories have also informed analyses of regional development. These theories examine the emergence of the modes of economic and social life and economic and social organization that first appeared in Europe and were subsequently extended to other parts of the world. In extreme cases all areas are considered to occupy different positions on the same development path. A post-World War II example is afforded by the stages of (neo-American) economic growth identified by Rostow: traditional society; the preconditions for take-off; take-off; the drive to maturity; and the age of high mass consumption. Contemporary examples include neoliberal models of globalization and development. All of these accounts suggest that less developed areas simply find themselves at an earlier stage along a single development path already charted by the most developed capitalist economies in the world.

An influential East Asian variant of modernization theory was the flying geese paradigm (Figure 3). This model is centered on the idea that East Asian catch-up involved the emergence of a dominant growth center (Japan) which subsequently acted as the leader of a hierarchical group of followers that included in the second tier, the Asian Tiger Economies and in the third tier Malaysia, Thailand, Indonesia, and other members of the Association of Southeast Asian Nations (ASEAN), and finally China and Vietnam (which is also an ASEAN Member State). Drawing on dynamic versions of trade theory, the idea was that the emerging economies in East Asia pursued one after another, a sequence of industrial evolutions. The first involved a product cycle sequence involving successively the import of modern manufactures, domestic production, export, and finally re-imports once production was moved offshore. The second involved an industrial sequence involving a movement from lower to higher value-added activities and a succession of industries (textiles, chemicals, iron and steel, motor vehicles, and electronic products). The third sequence was inter-national rather than intra-national and involved the transfer of products and industries from countries that were more advanced to countries occupying lower positions in the hierarchy.

Theories of dualism developed especially in studies of economically under-developed areas are a variant of modernization theory. These theories emphasized the existence of sharp differences in the organization, degree of development, and goals of actors in the modern and traditional sectors of under-developed areas and envisaged a progressive expansion of the former at the expense of the latter. A classic example is the Lewis model which rested on the idea that there was disguised unemployment in the traditional agricultural sector/rural areas so that the transfer of surplus labor from the agricultural sector/areas to the modern sector/more developed areas would leave agricultural output unchanged, yet increase the output of the modern sector. As with many orthodox economic models, the outcome was not the anticipated one: agricultural output declined; rural–urban migration, urban unemployment, and regional disparities increased and rural incomes were not large enough to provide a market for manufactured goods.

A number of the other models applied to underdeveloped countries identified vicious circles of underdevelopment. An example is the case where insufficient savings leads to capital shortages, capital shortages lead to low productivity, low productivity to low real incomes, and low real incomes to insufficient savings completing the circle.

A wide range of strategies were designed aimed at breaking this and other vicious circles and at ensuring a progressive expansion of the modern sectors of under-developed economies. Most of these models targeted investment. Models of balanced growth argue for a series of complementary investments capable of providing market demand for each other perhaps with the added impulse provided by a big push and active development planning. Models of unbalanced growth propose a concentration of investment in a few small projects whose backward and forward linkages sequentially create shortages, bottlenecks, and opportunities for further profitable investment. Growth pole models were a variant of an unbalanced growth strategy adapted to the development plan approach that Hirschman opposed. For Perroux, a growth pole is an enterprise or industry that has propulsive effects on related activities through the creation of external and agglomeration economies and forward and backward linkages, while for Boudeville, the concept could also apply to geographical areas of concentrated development (growth centers and perhaps to industrial districts).

In the 1950s–1980s a more critical set of perspectives emerged in the shape of renewed interest in (internal) colonialism and imperialism on the one hand and the emergence of theories of dependency and world systems on the other. All of these models contested the idea that all areas were following similar development paths. At the center of these approaches was the idea that the causes of relative under-development were to be found not so much in the internal conditions in less developed areas as in the impacts of their dependence on economically more advanced/industrialized areas. Although economically under-developed areas did have distinctive characteristics, these characteristics were a result of relationships of dependence that created structural deformations, center–-periphery relationships, and class divisions between externally oriented elites and marginalized people within economically under-developed areas.

The original thesis was associated with Singer and Prebisch. At the center of this approach was the view that the application of the principle of comparative advantage in the global economic system condemned some underdeveloped countries to a situation in which they specialized in and exported raw materials and agricultural products and imported from more developed countries, manufactured goods. Contrary to the expectation that productivity growth in manufacturing would reduce the relative price of manufactured goods, these writers argued that the prices of rich-area manufactures increased relative to the prices of the under-developed area exports. As a result, this division of labor created a self-perpetuating structure of development and underdevelopment in which poor countries imported high value-added goods and exported low value-added goods, so that export earnings were never sufficient to pay for imports. A further possibility was that of immiserizing growth if increased exports from less developed areas are more than offset by deteriorating terms of trade.

More radical interpretations of the drivers of the terms of trade included theories of unequal exchange. According to these theories, the fundamental problem was that wages are relatively low in economically under-developed countries, and that rates of profit do not differ (with capital actually flowing to economically developed areas) so that the merchandise produced in under-developed areas is sold at relatively low prices: a worker in a rich area can therefore purchase for a few hours of his/her work the product of an entire day's work of a worker in an under-developed area. This proposition was extremely controversial for it suggested that instead of capitalists exploiting workers it is workers in rich areas that exploit workers in less developed areas: the former make the latter pay for their high wages through unequal exchange.

The dependency thesis itself was also given a more radical interpretation with the rise of radical dependency and world systems approaches. These models explained the underdevelopment of dependent/peripheral/satellite and of semiperipheral countries by their political and economic subordination to the interests of dominant/center/metropolitan economies and to their domestic allies. Underdevelopment was seen as radically different from no development/development not having taken place (i.e., underdevelopment is radically different from no development/development not having taken place). The reason for this is that peripheral resources are actively used. The way in which they are used is to benefit metropolitan economies and involves the creation of internal rural–metropolitan imbalances as under-developed economies are organized in order to satisfy the needs of their export sectors, the enclaves in which they are located, and their rich externally oriented elites.

2.2 Dependency

Modernization theory emphasized internal factors while making an exception of science. Dependency theory and its close relative, world system theory, emphasized the role of external relationships in the developmental process. Relationships with developed countries and particularly with multinational corporations were viewed as barriers. Economic growth was controlled by forces outside the national economy. Dependency theory focused on individual nations, their role as suppliers of raw materials, cheap labor, and markets for expensive manufactured goods from industrialized countries. The unequal exchange relationship between developed and developing countries was viewed as contributing to poor economic growth. World system theory took a larger perspective, examining the wider network of relationships between the industrialized ‘core’ countries, impoverished ‘peripheral’ countries, and a group of ‘semiperipheral’ countries in order to show how some are disadvantaged by their position in the global system. Because of their overspecialization in a small number of commodities for export, the unchecked economic influence of external organizations, and political power wielded by local agents of capital, countries on the periphery of the global capitalist system continue to be characterized by high levels of economic inequality, low levels of democracy, and stunted economic growth.

What is important about the dependency account is that science is not viewed in benign terms, but rather as one of a group of institutional processes that contribute to underdevelopment. As indicated above, research is highly concentrated in industrialized countries. Dependency theory adds to this the notion that most research is also conducted for their benefit, with problems and technological applications selected to advance the interests of the core. The literature on technology transfer is also viewed in a different light. The development of new technology for profit is associated with the introduction and diffusion of manufactured products that are often unsuited to local needs and conditions, serving to draw scarce resources away from more important developmental projects. The condition of dependency renders technological choice moot.

This concern with choice, associated with the argument that technology from abroad is often imposed on developing countries rather than selected by them, has resurfaced in many forms. In the 1970s it was behind the movement known as ‘intermediate’ technology, based on the work of E. F. Schumacher, which promoted the use of small-scale, labor-intensive technologies that were produced locally rather than of complex, imported, manufactured goods. These ‘appropriate’ technologies might be imported from abroad, but would be older, simpler, less mechanized, and designed with local needs in mind. What these viewpoints had in common was a critical approach to the adoption of technology from abroad.

By the late 1980s and 1990s even more radical positions began to surface, viewing Western science as a mechanism of domination. These arguments were more closely related to ecological and feminist thought than to the Marxist orientation of dependency theory. Writers such as Vandana Shiva proposed that Western science was reductionist and patriarchal in orientation, leading to ‘epistemic violence’ through the separation of subject and object in the process of observation and experimentation (1991). ‘Indigenous knowledge’ and ‘non-Western science’ were proposed as holistic and sustainable alternatives to scientific institutions and knowledge claims. Such views had an organizational base in nongovernmental organizations (NGOs), which received an increasing share of development aid during this period, owing to donor distrust of repressive and authoritarian governments in developing areas. NGOs have been active supporters of local communities in health, community development, and women's employment, even engaging in research in alternative agriculture (Farrington and Bebbington 1993).

1 Coherent Syndromes of Change: Why do Things go Together?

A central claim of modernization theory is that economic development, cultural change, and political change go together in coherent, and to some extent, predictable patterns. Once a society starts to industrialize, a variety of related changes become almost inevitable, such as urbanization and bureaucratization, and eventually, changing gender roles. These consequences are not iron laws of history, but the probability is high that they will occur, once a society has embarked upon industrialization.

Industrialization also brings ‘social mobilization,’ or rising levels of mass participation. As Daniel Lerner (1958) and Karl Deutsch (1961) pointed out, urbanized populations are easier to organize than a scattered peasantry and a literate public finds it easier to keep in touch with what is happening on the national scene, becoming increasingly articulate. With social mobilization, a growing proportion of the population becomes politically relevant. Representative democracy becomes possible but not inevitable: throughout most of the twentieth century, it was unclear whether fascism, communism, or democracy would triumph. All three of these systems mobilized mass political participation, but the fascist and communist versions did so in the service of one-party authoritarian systems.

Although a variety of social theorists agree that technological and economic changes are linked with predictable patterns of cultural and political change, there has been continuing debate over the causal linkages: does economic change cause cultural and political change, or does it work in the opposite direction?

Marx emphasized economic determinism, arguing that a society's technological level shapes its economic system, which in turn determines its cultural and political characteristics. Given the technological level of the windmill, a society will be based on subsistence agriculture, with a mass of impoverished peasants dominated by a landed aristocracy. The steam engine brings an industrial society in which the bourgeoisie becomes the dominant elite, exploiting and repressing an urban proletariat.

Weber, on the other hand, argued that culture was not just an epiphenomenon of the economic system, but an important causal factor that can shape economic behavior, as well as being shaped by it. Thus, the emergence of the Protestant Ethic facilitated the rise of capitalism, which contributed to both the Industrial Revolution and the Democratic Revolution.

Some of Marx's successors shifted the emphasis from economic determinism toward a greater emphasis on the impact of ideology and culture. Thus Lenin argued that by itself, the working class would never develop sufficient class-consciousness for a successful revolution; they needed to be led by an ideologically aware vanguard of professional revolutionaries.

Mao emphasized the power of revolutionary thinking even more strongly. Breaking with Marxist orthodoxy, he believed that China need not wait for the processes of urbanization and industrialization to transform her. If an ideologically committed cadre could instill sufficient enthusiasm among the Chinese masses, a communist revolution could succeed even in an agrarian society.

The classic versions of modernization theory were deterministic, with the Marxist version tending toward economic determinism, and the Weberian version sometimes tending toward cultural determinism. A more recent view is that the relationships between economics and culture and politics are mutually supportive, like the various systems of a biological organism. It is pointless to ask whether the behavior of the human body is really determined by the muscular system, the nervous system, or the respiratory system as each plays an essential role, and life ceases if any of them breaks down. Similarly, political and economic systems require a supportive cultural system—otherwise they would need to rely on naked coercion, which rarely endures for long. Conversely, a cultural system that was incompatible with its economic system would be unlikely to survive.

In the course of history, numerous patterns of social organization have been tried and discarded, while other patterns eventually became dominant. At the dawn of recorded history, hunting and gathering societies prevailed, but the invention of agriculture led to their almost total disappearance. They were displaced because agriculture has functional advantages over hunting and gathering. Similarly, within two centuries after it emerged, industrialization was adopted (at least as a goal) by virtually every society on earth.

8 African Political Study and Comparative Politics

From the first application of modernization theories of largely extra-African derivation to African political study, a succession of conceptual perspectives drawn from comparative politics broadly defined have shaped political inquiry (dependency, neo-Marxism, rational choice, economic and political liberalism). In turn, African political study has made an important contribution to comparative politics. Instrumentalist and constructivist theories of ethnicity in their initial phases were strongly influenced by African studies (Young 1976); these modes of interpretation added important new dimensions to the comparative study of nationalism, which took on new life in the 1980s and 1990s (Rothschild 1980, Anderson 1983). The rebirth of the concept of civil society began in Africa and the former Soviet camp in the 1980s. Africa was a critical site of the late-century democratization experiments, which fed into the comparative study of democratic transitions (Diamond et al. 1995).

Africanists are prominent in the field of gender political studies. Analytical recognition of the political economy of the ‘informal sector’ or underground economy in good part originates in Africa-based studies. Understandings of the politics of patrimonialism rest heavily on African evidence. The collapse of some African states and the failure of others in the 1990s injected novel themes of state crisis into comparative politics (Zartman 1995). Sustained patterns of civil conflict and violence in some parts of Africa had counterparts in some regions of the former Soviet Union, suggesting the emergence of new kinds of political pathologies requiring analysis.

The singular trajectory of the African state generates multiple challenges to understanding, and divergent responses. The odyssey of independence began with high hopes and unrestrained optimism in the capacity of the state to manage rapid development and build an expanding political order from the center. Overdeveloped states and parastatalized economies ran into crisis, requiring far-reaching adjustments, economic retrenchment in the 1980s and political liberalization in the 1990s. An earlier apprehension of excessive state strength gave way to fears of state decline and weakness; analysts differed as to whether the prime cause was the inner logic of colonial autocracy embedded in the postcolonial polity (Mamdani 1996, Young 1994), or reflected a continuous pattern of underlying state weakness dating to precolonial times (Herbst 2000). The quest continues for forms of rule which could bring sustainable development, accountable and effective governance, and also be authenticated and legitimated by a rooting in the African cultural heritage.

In sum, African politics as a field rests upon a dual dialectic. On the one hand, the rapid succession of distinctive political moments within Africa engages and defines the interpretive priorities of students of African politics. In turn, African political study remains firmly embedded in the larger field of comparative politics, whose evolving conceptual persuasions shape the orientations of its practitioners.

Modernization and Modernization Theory in the Social Sciences after 1945

After World War II, ‘modernization theory’ in a more limited, very specific sense emerged in the context of American social science, and American postwar political culture in general. With the ‘American century’ and the vision of a ‘Pax Americana’ reaching its climax, economic, political, and social development elsewhere in the world was increasingly viewed in the perspective of progressive Americanization that would, in the end, lead to a homogeneous system of modern industrial societies. The modernization of the West, and the USA in particular, was regarded a model for the future development of ‘Third World’ countries, their agrarian societies, and authoritarian political structures. The optimistic mood of social-scientific theories in this vein, their sometimes crude and simplistic assumptions about modernization, and their somewhat intellectually ‘imperialist’ stance toward non-European cultures have been much criticized since the late 1960s. In some areas of cultural theory and cultural history, they have been treated with contempt or, at best, with disregard. However, one should not ignore the fact that in the 1950s and 1960s, modernization theory marked an important step in the professionalization of concepts of social change and development and in the thinking about ‘modernity’ in general. Also, concepts of modernization developed in sociology and political science often radiated beyond the boundaries of their disciplines and proved very influential in other disciplines such as history.

The approaches of modernization theory between the 1950s and 1970s need not be described here in detail (for an overview and literature, see Lerner et al., 1968), but it may be useful to mention some fundamental concepts and assumptions, especially insofar as they inspired empirical work in historical sociology or history proper. The classical post-1945 modernization theory crystallized at a time when structural–functional theory in sociology stood in high regard, and when social and cultural problems were often discussed in terms of a theory of social systems. Harvard sociologist Talcott Parsons best epitomizes this approach; like many others, he attempted to link the somewhat static assumptions of functionalism with more dynamic Weberian concepts of rationalization and evolutionary change in Western history (see, e.g., Parsons, 1966). American modernization theory mostly concentrated on the transition from ‘traditional society’ to industrial capitalism in the economy and on the transition to democracy and mass participation in the realm of politics. For Western societies, this implied a strong focus on the nineteenth century, a time period which at that time also became increasingly important in the work of historians in many countries. While quantitative approaches in modernization theory were rarely applied in empirical historical studies, qualitative analytical concepts like theories of economic growth (e.g., Walt W. Rostow, Alexander Gerschenkron) and of political modernization, especially of state formation and nation-building (e.g., Karl W. Deutsch), proved attractive for historians interested in problems of social and institutional change.

In modernization theories of the 1950s and 1960s, a dichotomy of ‘tradition’ and ‘modernity’ often figured prominently; sociologists and political scientists established catalogs with typical features of ‘traditional’ societies (e.g., agrarian, localistic, and homogeneous) and contrasted them with features of ‘modern’ societies (e.g., urban, centralistic, and heterogeneous). Though this seemed to confirm a static, even ahistorical bias in modernization theory, the traditional–modern dichotomy, which in many respects traces back to Ferdinand Toennies' distinction between Gemeinschaft and Gesellschaft, became a widespread analytical tool in history and historical sociology in the 1960s and 1970s. Concepts such as this, focusing on the transition from tradition to modernity through a series of crises which modernizing societies had to undergo, proved attractive to historians who were interested in the history of revolutions or in the emergence of participatory democracy. They also triggered a wave of empirical work in historical sociology between the late 1950s and the early 1970s in which historical processes of transition to modernity were analyzed, as in Neil Smelser's application of Parsonian theory to English industrialization (Smelser, 1959). Other scholars made use of Weberian concepts of comparative change in Western and non-Western (e.g., China and Japan) societies (see, e.g., Eisenstadt, 1973; Moore, 1966). This line of research has never been completely cut off, but it grew thinner and, in the 1980s and 1990s, stood under an ever larger shadow of cultural theory and anthropology, that is, of disciplines and approaches which fundamentally questioned the assumptions of macrosociological Western-oriented modernization theory.

3 Gender, Environment, and Development

Critiques of mainstream economic development and modernization theory at the international scale revealed how women were invisible in modernization initiatives and within development theory and policy more generally. For example, the majority of women in sub-Saharan Africa are food producers who are responsible for provisioning their households. However, throughout Africa and elsewhere, women were, and still are, unable to gain access to the social, financial, technical, and natural resources that would enable them to provide adequately for their households. As women were incorporated slowly and unevenly into the modernist project through economic development programs aimed at their inclusion, subsequent research revealed how gender bias in development and nesting patriarchal ideologies could exacerbate as well as alleviate their particular vulnerabilities. In addition, this research demonstrated how technology transfer deskilled or did away with working class women's work, and how modernization and development policy and practices in Africa, Asia, and Latin America transformed rural environments and indigenous social and cultural networks, often reproducing or reinforcing gender stereotypes and inequalities. These critiques of mainstream development theory and practice drew from structuralism and Marxian political economy. Studies of the nexus of capitalism, development, populations, and ecologies stressed how oppression and injustice are linked to environmental transformation and change, the industrial geographies of resource extraction and capitalism's creations of surplus (Di Leonardo 1991, Seager 1993).

Examining diverse dimensions of women's work and access to natural resources was critical in revealing the ways in which women were largely disadvantaged by mainstream modernization efforts and policies. Intersections of imperial and indigenous forms of patriarchal power and control could constrict access to land, credit, technology, and education and shape human reproduction. Environmental justice movements and feminist research linked poverty and environmental degradation such as tropical deforestation, irrigation, and pesticide poisoning to gendered relations within the colonialism and to development-induced scarcity. Household vulnerability, changing individual, household, regional and national entitlements, and a lack of democracy are linked to the persistence of poverty and to environmental degradation. Gendered identities and relations crosscut racism, class, age, marital status, ethnicity, and nationality.

Alternatives to mainstream development explore indigenous agroecologies and ecological knowledge, the organization and endurance of social movements linked to environmental concerns, and examine popular struggles and resistance by women and by marginalized and indigenous peoples. The ecofeminist project is one of inclusion and interconnectedness. Feminist political ecology refuses to accept binary dualisms linking gender relations and activities to nature and valuing women and/or nature as inferior or unequal (Plumwood 1993). Thus, ecofeminism and feminist political ecology concern struggles for liberation.

Chains of Exploitation

Frank was a leading critic of modernization theory – the notion that progressive change began in the center and spread to a periphery that was always relatively backward. This entailed Frank’s criticism of the ‘dual society’ thesis, that underdeveloped societies had a dual structure of modern and traditional sectors, each with its own dynamic, and poorly fitted together. For Frank attributing underdevelopment to traditionalism (or feudalism), rather than capitalism, was a historical and political mistake. World capitalism had destroyed or transformed earlier social systems even as it came into existence, converting them into sources of its own further development. For Frank, the economic, political, social, and cultural institutions of the underdeveloped countries resulted instead from the penetration of capitalism, rather than being original or traditional. Frank focused on the metropole–satellite (or center–periphery) relations he found typical of Latin America. The underdevelopment of peripheral-capitalist regions and people, he said, was characterized by three contradictions: (1) the contradiction of the monopolistic expropriation of economic surplus; (2) the contradiction of metropolis–satellite polarization; and (3) the contradiction of continuity in change. Drawing on Marxist analyses of the class expropriation of surplus value, especially Baran’s version which emphasized the potential surplus which could be made available for investment under noncapitalist circumstances, Frank argued that external monopoly resulted in the expropriation (and thus local unavailability) of a significant part of the economic surplus produced in Latin America. The region was actively ‘underdeveloped’ (made less developed) by the expropriation of its surplus product (source of investment capital in Marxist theory). Using a case study of Chile, Frank described the pattern of surplus movement as a massive, geographical expropriation system reaching the most remote corners of the region, with a surplus extraction system running through it. This chain-like set of links connects the capitalist world and national metropolises to the regional centers (part of whose surplus they appropriate), local centers, and so on, down to large landowners or merchants who expropriate surplus from small peasants or tenants, and sometimes even from these latter to landless laborers exploited by them. At each step a relatively few capitalists above exercise monopoly power over many below, expropriating their economic surplus. Thus at each point, the international, national, and local capitalist system generates economic development for the few and underdevelopment for the many. This idea of surplus transfer over space was further developed by Frank as a system whereby center and periphery become increasingly polarized as capitalism developed the one, and underdeveloped the other, in a single historical process. In this perspective, only a weaker or lesser degree of metropole–satellite relations allowed the possibility of local development. These two systems suggested a third to Frank – the continuity and ubiquity of structural underdevelopment throughout the expansion of the capitalist system.

From this perspective on underdevelopment, Frank generated more specific hypotheses that could be used in guiding development theory and policy. In contrast to the world metropolis, which was satellite to no other region, the development of national and regional metropolises was limited by their satellite status – for example, local metropoles such as São Paulo, Brazil, or Buenos Aires, Argentina, could only achieve a dependent form of industrialization. Real development thus entailed separation and autonomy from the global capitalist system. Similarly, in a hypothesis directly opposed to the finding of modernization geography, that development was spread through contract with the metropolis, Frank hypothesized that the satellites experienced their greatest development when ties to the metropolis were weakest – historically during wars, geographically in terms of spatial isolation. By extension, regions which had the closest ties to the metropole in the past were the most underdeveloped in the present – Frank found this confirmed by the ‘ultra-underdevelopment’ of the sugar-exporting region of northeastern Brazil and the mining regions of Bolivia. In summary, underdevelopment in Frank’s theory was not an original condition, nor the result of archaic institutions surviving in isolated regions, nor even did it come from Third World irrationalism. Underdevelopment was generated by the same processes which developed the center; in particular, underdevelopment in the periphery resulted from the loss of surplus which was expropriated for investment in the center’s development.

An immediately noticeable weakness in Frank’s theory lay in his failure to specify the economic mechanisms of surplus extraction. In some cases the mechanisms of surplus extraction were obvious – for example, when European, North American, or (later) Japanese or Chinese corporations owning land, factories, and resources in Latin American countries and withdrawing surplus as rent or profit, or when the international banks, the International Monetary Fund (IMF) or World Bank, loaned capital to peripheral states and enterprises and withdrew surplus as interest payments. But what of peasant producers, owning their own land, and producing cash crops for export to center markets, a situation typical of much of the peripheral agriculture in the nineteenth and twentieth centuries?

Here the beginning of an answer was provided by Arghiri Emmanuel in the theory of unequal exchange. Like the ECLA economists, Emmanuel argued against neoclassical trade theory, which said that the international division of labor and system of trade had advantages for all participants. Emmanuel argued instead that trade made poor countries poorer, and rich countries richer – so that arguments for free trade were arguments for maintaining the advantage of developed countries. Emmanuel assumed the perfect international mobility of capital, but the immobility of labor between countries – hence wage rates persistently differed greatly between the two sets. Peripheral countries exported agricultural products which embodied large quantities of cheap labor and imported industrial products embodying small amounts of expensive labor. This led to terms of trade favoring the higher-cost products of the center, while devaluing the lower-cost exports of the periphery. Peripheral countries were prevented from achieving development because they sold their goods at prices below values (the socially necessary labor embodied in the products), while rich countries sold goods at prices above values. For Emmanuel, unequal exchange (through trade) was a hidden mechanism of surplus extraction and a major cause of the economic stagnation in the periphery. Samir Amin estimated the amount of surplus transferred from poor to rich countries via unequal exchange to be 1.5% of the product of the rich countries, but 15% of that of the poor countries, an amount, he thought, that was “sufficient to account for the blocking of the growth of the periphery.” From the perspective of dependency theory the peripheral countries borrowed back their own surplus to finance ‘development’. The geopolitical implications of this are enormous – debt forgiveness is justified as reparations for injuries done in the past and continuing into the present, rather than the conventional justification, as charity for the poor.

For dependency theorists, Europe’s development was based on external destruction – brutal conquest, colonial control, and the stripping of non-Western societies of their peoples, resources, and surpluses. From historical processes like these came a new global geography of European First World center and non-European Third World periphery. The relationship between center and periphery assumed, for the Brazilian geographer Teontonio Dos Santos, the spatial form of dependence, in which some countries (the dominant) achieved self-sustaining economic growth, while others (the dominated and dependent) grew only as a reflection of changes in the dominant countries. The incorporation of Latin America into the capitalist world economy, directly through (Spanish and Portuguese) colonial administration, but more subtly through foreign trade, geared the region’s economies toward demands from the center. Dependence skewed the region’s social structure so that local power was held by a small ruling class which used the gains derived from exporting for luxury consumption rather than investment; real power was exercised from external centers of command in dominant (‘metropolitan’) countries. Dependence continues into the present through international ownership of the region’s most dynamic sectors, multinational corporate control over technology, and payments of royalties, interest, and profits to external corporations, banks, and development agencies.

Yet, there were other, more serious, criticisms of Frank. The Brazilian economist Fernando Henrique Cardoso found the notion of the development of underdevelopment a neat play on words, but not helpful in concrete terms. In Latin America, he said, multinational corporations invested in modern industrialization, while supposedly traditional sectors (agriculture, mining) operated in technically and organizationally sophisticated ways, and both were parts of an advanced yet still-dependent capitalist development. However, he added that in countries like Argentina, Brazil, and Mexico spatial and sectoral dualisms had emerged, with space divided between advanced regional economies tied to the international capitalist system, and backward sectors, or internal colonies, isolated from progress. Multinational corporations were interested in at least some development for dependent countries because of the markets this prosperity provided. However, the Latin American countries remained dependent for technology on the United States. In contrast to Frank’s universalism, Cardoso wanted to look at specific situations in particular parts of the Third World, where development and dependence could be found in tandem. We might note that, on becoming president of Brazil in the 1990s, Cardoso adopted a neoliberal policy position in line with his notion of dependent development.