6 September 2011

Marxism enshrines the historical principle that those who have the means to control will always use those means to exploit those who don’t have them, for their own benefit and to ensure that they retain the means to control.

In terms of Development, there are 2 key Marxist theories: Dependency Theory and World Systems Theory.

Dependency Theory

Andre Gunder Frank (1971) created Dependency Theory as a counter to Modernisation Theory. He argued that developing countries cannot develop as Modernisation Theory states they should , not because of their own inadequacies but because the developed West has deliberately and systematically ‘underdeveloped’ them, leaving them in a state of dependency.

Frank picked up on work by that had been going on by a number of Marxists and neo-Marxists studying Latin America since the 1930s and coming to the conclusion that, while these countries were politically independent, they were economically dependent on the industrial societies. However, in using the phrase ‘the development of underdeveleopment’, Frank went much further than his predecessors. For there to be rich nations, poor nations had to be kept poor. He saw Walt Rostow’s (1960) 5-stage theory of modernisation as academic fog behind which a process of domination and exploitation, as rigid and destructive as that of the 19th Century under imperial and colonial expansion.

Frank argued that, since the 16th Century, there has grown a world capitalist system, an interlocking chain consisting of the metropolis or core of the developed world which benefits from the economic surplus of the satellite or peripheral countries. The latter “…have low wages, enforced by coercive regimes that undermine independent labour unions and social movements. The metropolis exploit them for cheap labour, cheap minerals and fertile tropical soils.” (Frank, 1971, p12).

In Frank’s view, development of the core (cities) is at the expense of the underdevelopment of the rural periphery. Frank’s views are often portrayed over-simplistically as dividing the world simply into core and periphery; but, in fact, he actually saw it as more complex than that, with the cities of the peripheral countries part of a gigantic supply chain of exploitation, sucking in men and raw materials from the desperately poor rural areas. Frank’s typical supply chain of exploitation is represented in the schematic to the left….

Aidan Foster-Carter (1985) describes the ultimate satellite is a landless rural labourer who has nothing and no one to exploit and is probably female.

Slavery and Colonialism - the Origins of Dependency

From 1650 to 1850 some 9 million Africans (between the ages of 15 and 35) were shipped across the Atlantic to work as slaves on cotton, sugar and tobacco plantations in America and the West Indies, owned mainly by British

settlers. The British slave-traders and the plantation owners made huge profits.

Between 1650 and 1900, European powers, with Britain in the lead, used their superior naval and military technology to conquer and colonise many parts of the world. Paul Harrison (1990) argues that the principal result of the European empires was the creation of a global economy on European terms and the beginnings of the world capitalist system…

• Colonies were primarily exploited for their cheap food, raw materials and labour - eg; Britain’s virtual monopoly over cotton benefited expansion of the Lancashire and Yorkhsire textile industries

• The most fertile land was appropriated for growing cash crops for export to the West

• New markets in the colonies were created for manufactured goods from the industrial world

• Local industries, especially manufacturing, that attempted to compete with those of the colonial powers, were either destroyed or undermined by cheap imported manufactured goods from the West

• Division and conflicts were created or reinforced between indigenous peoples as the colonial powers sponsored some tribes

• Arbitrary borders were imposed, especially in Africa - these represented the boundaries of the lands conquered by each colonial power but they often cut across tribal boundaries, often placing one part of a tribe in one European colony with part of another tribe with whom they had had long running conflict while another part of the first tribe would find themselves in a neighbouring but totally different European colony.

In Integrated SocioPsychology terms, this disrespect of African PURPLE tribalism by European RED/BLUE can be attributed as a major cause of conflict in the post-colonial era. (See: Development & Conflict.)

Neo-Colonialism

While the vast majority of the European colonies had achieved independence by the early 1970s, Frank argues that their dependency continues through neo-colonialism and that this can be just as harmful to those countries and their peoples as slavery and colonialism.

Their former masters had frequently organised the economies of the colonies to concentrate on one or 2 crops or materials - primary products - required by their own domestic industries. When these countries became independent, they were largely dependent on these products for export earnings. Oli Brown & Jason Gibson (2006) estimated that, of approximately 2.5 billion people in agriculture in developing countries, about 1 billion receive most of their income from exports of agricultural or mineral commodities. Out of 141 developing countries, 95 depend on commodities for at least 50% of their export earnings. Approximately 2/3 of African countries get over 80% of their export earnings from on or 2 commodities - see below.

Examples of countries reliant on a limited range of commodities in their exports (Brown & Gibson, 2002)

Overproduction of the primary products, or any fall in demand due to a variation in Western tastes and lifestyles, can have a severe negative effect upon the developing economies. This can be made worse by their markets often consisting of only a few metropolitan countries rather than many. (The main one is often their previous colonial master.) Prices have risen recently for some commodities - eg; copper, aluminium, rubber and soya beans - due to soaring demand from China which now accounts for 15% of global imports of these commodities. However, if China’s economy were to slow down - as it did in the early days of the recent global recession - then commodity prices would tumble across the board.

Raw materials have little value in themselves. It is the processing of those raw materials into manufactured goods that adds value in terms of the prices charged to the consumer. This processing mainly occurs in Western countries and, consequently, it is the West that reaps the benefit. Eg: a £1 chocolate bar in the in the UK will provided the manufacturer with 77p per bar (before deduction of costs), 17p straight to the government as VAT and only 6p to the cocoa farmers (before deduction of tax and costs). If coffee was processed and packaged in the countries in which it was grown, much of the profit from the ‘value-added processes’ of such processes and packaging would be lost to the company selling the coffee to the supermarkets in the core cities. The ironic by-product of this is that most of the instant coffee drunk in a major coffee grower like Brazil is imported via  transnational corporations (TNCs).

Western nations can limit the amount of goods imported from the developing world by imposing tariffs to make the

imported goods more expensive than their domestic equivalents and quotas to limit the number being imported. Another tactic to undermine the export activities of developing countries is to heavily subsidies the domestic product when it is exported into the developing country, thus enabling it to be sold in the developing country at prices lower than the cost of production there. This will drive down prices as local producers try to compete with the Western products flooding into their country. Food aid can sometimes have a similar effect as it demotivates local farmers. (Dependency theorists argue that official aid and the international debt crisis resulting from borrowing money from Western governments and the likes of the World Bank and the International Monetary Fund is another major component of neo-colonialist exploitation.)

Sometimes the value of a commodity may be totally out of the control of the producer country - with its price being set by commodity speculators in Western organisations such as the London Metal Exchange. The Merrill Lynch bank estimated in 2006 that commodities were trading at 50% higher than they would have been without speculation. Any fluctuation in the world’s money or credit market could burst this financial bubble.

Western inflation over the past 30 years has meant that the price of manufactured goods produced by the West has risen quickly while the prices of the primary products mainly produced by the developing world have actually fallen. Teresa Hayter (1981) calls  cash crops ‘false riches’ because countries have to grow more and more of them to get the same amount of manufactured goods in return. In 1960 the earnings from 25 tons of natural rubber would buy 4 tractors but in 1981 it was not enough to buy one. “…in their desperate search for foreign exchange, underdeveloped countries produce more and more, thus setting up vicious circles of overproduction and declining prices.”

The money earned by the export of primary commodities can also be severely undermined by natural disasters, political instability and military conflict.

Western countries may also restrict the export of technology such as machine tools, computers and processing equipment to developing countries - usually on the grounds that the political flavour of the government of a developing country is unacceptable.

Commodity Dependence & Local Elites

The exploitation of developing countries’ export-oriented primary production is often made easier by alliance between the agents of the developed world - ie: the TNCs - and the local landed elite whose power is often derived from the days of colonialism. This produces vested interests along Frank’s supply chain of exploitation, with each point closer to the centre more concerned to control those more out in the periphery. Ankie Hoogvelt (2001) says: ‘…their economic interests became increasingly intertwined with those of the advanced capitalist states,and their cultural lifestyles and tastes were a faithful imitation of the same.”

Fernando Henrique Cardoso (1972) points out that these elites enabled TNCs to penetrate into developing countries on highly-favourable terms for the Western Capitalists. In doing so, they benefited economically themselves from the related trade and banking arrangements. Eg: it has not been just the traders on the world commodity markets who have exploited coffee producers in Brazil but also the Brazilian merchants exporting the coffee and the landowners who enjoyed a good lifestyle at the expense of the landless agricultural workers. The likelihood is that such elites would be happy for Brazil to remain a dependent coffee producer.

In some extreme cases, the elites, often military in origin, have even used violence to remove threats to foreign interests in their countries. The police, with repressive powers, are often used to assure the co-operation of the masses.

Transnational exploitation of the resources and labour of developing societies is seen by Dependency theorists as a crucial aspect of neo-colonial power.

Interestingly, the term ‘banana republic’ often applied disparagingly to Latin American countries right up to the 1990s - to indicate they were backward and corrupt - comes originally from the fact that countries like El Salavador and Nicaragua were under the control of local oligarchies or families who were paid employees of American fruit companies such as United Fruit.

Resolving Dependency

J Timmons Roberts & Amy Hite (2000) set out 2 viewpoints to resolving issues of dependency:-

• “Underdevelopment is not a phase but a permanent, inescapable position. In other words, the only way this position of dependency can be escaped is to escape from the entire capitalist system.” (p13)
  However, Franks’ theory suggests countries in the periphery can never develop in a sustained way so long as they are stuck in what Paul Baran (1957) calls an ‘imperialist’ stage of Capitalism and remain part of the world capitalist system.
  A country isolating itself, as China did, is one possible way of escaping dependency - but the emergence of China as a major economic power on the world stage in the noughties was driven by the adoption of Capitalist free-market principles and extensive trading with the West.
  Another way of escaping is ‘break away’ when the dominating core country is weak through war or recession. However, Frank was pessimistic about this route, believing that, sooner or later, the global Capitalist economy would reassert its control by:-

1. denying the ‘rogue country’ access to free world trade# applying sanctions to countries
2. applying sanctions to countries which attempt to trade with it
3. the threat of military force
   When Egypt, under the radical president Gamel Abdel Nasser, tried to break away by nationalising the Suez Canal in 1956, Egypt was invaded by the combined forces of Britain, France and Israel.
   Cuba broke away via its Socialist revolution in the 1960s, with leader Fidel Castro pledging that Cuba would no longer be ‘a puppet of US imperialism’ and controlled by multinationals. Following the revolution, the United States first sponsored and militarily supported the disastrous Bay of Pigs landings by counter-revolutionaries (April 1961). Following that failure the US imposed an economic blockade that prevented Cuba exploiting its own natural resources and economic potential. The Soviet Union provided economic support and some degree of military protection until the collapse of Soviet Communism at the end of the 1980s. Living standards, already low, deteriorated even further, leading to a virtual exodus of economic migrants putting out to sea in small boats and makeshift rafts, heading for Miami. By 1994 the US Coast Guard estimated that some 1,200 Cubans per day were setting out for the American shoreline but only about 800 per day either made it or were picked up by the coast guard. In spite of the high human cost of the blockade, the Americans kept it in place and, perhaps surprisingly, the Castro regime appeared still to have a significant degree of support amongst the Cuban people.
   In spite of the North Vietnam-based Communists winning wars against first the French and then the South Vietnamese and their American allies, the independent and reunified Vietnam has been subject to a similar economic blockade to Cuba. The Americans agreed to lift the blockade when the government partly accepted the Americans’ demands to accept policies of economic liberalisation and move towards the development of Capitalist markets and political democratisation.
   (One development in Vietnam .which is being followed by African countries such as Malawi and Zambia, is that of eco-tourism. In the early 1990s, under the Communist government’s enforced policy of economic liberalisation, large tracts of land were given over to the formation of national parks. Most of the finance for these schemes comes from te United Nations of the World Bank. A major problem with the schemes is that indigenous peoples are moved off  their land to make way for Western-style tourist hotels.)

• The second view Timmons Roberts & Hite (2000) discuss argues that there is some scope for  ‘associate development’ or ‘dependent development’ through nationalist economic policies such as ‘Import Substitution Industrialisation’ (ISI}. This involves industrialisation to produce consumer goods that would normally be imported from developed countries. Hoogvelt comments on how ISI transformed the economies of South America, with industrial output increasing sixfold between 1950 and 1980 - Mexico supplying 95% of its own  consumer goods and Brazil 98% of its own.
  However, ISI is generally judged not to have succeeded because:-

1. it failed to address the issue of class and income distribution - ie: the existing elites controlled ISI and this led to a further deepening of the income and wealth inequalities of these societies

2. it was still dependent on the West for technical expertise, spare parts, oil, etc
3. the export-oriented form of industrialisation adopted by the Asian ‘tiger economies’ was seen as more successful

Dawn Elliot & John Harvey’s (2000) in-depth study of Jamaica illustrates aspects of both viewpoints. The researchers conclude that Jamaica’s development problems will never be solved by policies that ignore the vast inequalities in power arising from Jamaica’s political, social and economic history - principally the creation of the plantation economy by the British which resulted in vast inequalities in ownership of land that persist to this day. In modern times the Jamaican economy continues to serve the needs of the Jamaican ruling class rather than those of the masses.

Despite the difficulties in finding a way out of dependency, Hoogvelt notes that Dependency Theory had an impact on the political ideologies of many developing countries in the 1960s and 1970s. In particular she points out that many political leaders, especially in Africa, used the principles of Dependency Theory to argue for development as liberation from Western exploitation. Political and social movements in Africa in this period consequently stressed nationalism, self-reliance and delinking as a the means to counter neo-colonialism.